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MADISON - Medtronic, Inc. (Medtronic) and its wholly owned subsidiary, Medtronic Sofamor Danek USA, Inc., (MSD) have agreed to pay $59,741.87 to Wisconsin Medicaid plus interest to settle claims that it defrauded the program. That component was part of an aggregate settlement of $40 million to resolve allegations that Medtronic and MSD violated the federal False Claims Act by paying illegal kickbacks to certain physicians which resulted in the submission of false or fraudulent claims to the Medicare and Medicaid programs.
The case arose from two qui tam actions filed against the medical device manufacturer, which is headquartered in Minneapolis, Minnesota. Medtronic is a medical technology company which distributes a wide range of medical devices. The whistleblowers and the federal government alleged that from January 1, 1998 through April 30, 2003, Medtronic and MSD offered kickbacks to spine surgeons to induce them to choose devices marketed by MSD, the Medtronic subsidiary specializing in spinal implant devices. The kickbacks took various forms, including consulting and royalty agreements for which little or no work was performed; travel for doctors, their spouses and families; and consultant meetings held at lavish venues.
An investigation was conducted by the United States Department of Justice, the Health and Human Services Office of Inspector General, the Tennessee Bureau of Investigation, the National Association of Medicaid Fraud Control Units and the United States Postal Service.
The federal and state civil settlement agreements require Medtronic to pay $40 million plus interest to the Medicare and Medicaid programs. Additionally, Medtronic and MSD have entered into a five year Corporate Integrity Agreement with the Office of Inspector General to ensure future compliance by the companies with the laws, regulations and written directives of all federal health care programs. Under the terms of the settlement agreements, the United States received $34.2 million with the remaining $5.8 million distributed to the states. Medicaid is a joint state and federal program that provides health care benefits to hundreds of thousands of poor and disabled state citizens. Wisconsin's participation in the settlement resulted in a total recovery of $104,681.48 attributable to the Wisconsin Medicaid program.
In accordance with internal Department of Justice conflicts practices, Attorney General J.B. Van Hollen recused himself from participation in this matter. By delegation, Deputy Attorney General Raymond P. Taffora approved the settlement on behalf of the Department of Justice.