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Medtronic Settles Suit Over Heart-Device Kickback Claims

May 28 (Bloomberg) -- Medtronic Inc., the world’s biggest maker of heart-rhythm devices, agreed to pay $9.9 million to settle U.S. government claims that the company paid doctors kickbacks to implant its products.

Medtronic resolved allegations, first raised in a 2009 whistle-blower’s lawsuit, that it paid doctors to speak at marketing events, treated them to trips and lavish dinners, and provided tickets to sporting events as part of a campaign to persuade physicians to implant more of the company’s heart devices such as defibrillators and pacemakers, federal prosecutors said.

The settlement brings to more than $400 million the amount Minneapolis, Minnesota-based Medtronic has spent since 2007 to settle lawsuits over its handling of certain defibrillators, which some patients claimed were defective and endangered their lives.

“Decisions about devices used to treat cardiac rhythmic disease should be based on the best interests of the patient, not on whether the manufacturer is going to pay a kickback,” U.S. Attorney Benjamin Wagner in Sacramento, California, said in a statement today.

The settlement stems from a whistle-blower suit filed by Adolfo Schroeder, who worked as a Medtronic manager in 2006 and 2007 in the Cardiac Rhythm Disease Management division, according to court papers.

Doctor Payments

Company officials “funneled millions of dollars in unrestricted grant money to physicians” who made speeches and published articles supporting use of Medtronic heart devices in “asymptomatic patients and patients whose mild heart-failure symptoms did not meet” U.S. Food and Drug Administration criteria for getting an implant, Schroeder said in the suit.

Medtronic sales representatives used such payments to get access to physicians’ patient records so they could make recommendations on who should receive implants, he alleged.

Today’s settlement isn’t an admission that Medtronic engaged in unlawful activities, Cindy Resman, a company spokeswoman, said in a statement.

“This settlement brings to a close a long-running review of certain sales activities” in connection with heart devices over a nine-year period starting in 2001, she added.

Schroeder filed his complaint under federal laws barring companies from paying kickbacks to physicians and other health-care providers to generate sales of their devices. Prosecutors said the former manager stands to get more than $1.7 million as part of the settlement.

Other Settlements

Medtronic agreed in 2007 to pay about $130 million to settle consumer suits accusing the device maker of hiding defects in its defibrillators. The company agreed to a $268 million settlement of suits in 2010 over allegations that fractured wires in another line of defibrillators caused at least 13 patient deaths.

In the 2007 accord, patients claimed battery defects in Medtronic’s Marquis line of implantable defibrillators, which send electric jolts to correct potentially fatal heart rhythms, endangered their lives. In the 2010 settlement, the suits targeted defective wires connecting implantable Sprint Fidelis defibrillators to patients’ hearts.

The whistle-blower case is United States of America ex rel. Adolfo Schroeder v. Medtronic Inc., 09-cv-279 WBX EFB, U.S. District Court, Eastern District of California.

The 2007 settlement came in the case of In RE Medtronic, Inc. Implantable Defibrillator Product Liability Litigation, No. 05-MDL-1726, U.S. District Court for the District of Minnesota (Minneapolis). The 2010 accord came in the case In Re Medtronic Inc. Sprint Fidelis Leads Products Liability Litigation, 08-1905, U.S. District Court, District of Minnesota (Minneapolis).

To contact the reporter on this story: Jef Feeley in Wilmington, Delaware at

To contact the editors responsible for this story: Michael Hytha at Joe Schneider, Peter Blumberg

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