Financial Regulatory Spine

Medtronic Inc. to Pay $2.8 Million to Resolve False Claims Act Allegations Related to “SubQ Stimulation” Procedures

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Medical device manufacturer Medtronic Inc. has agreed to pay the United States $2.8 million to resolve allegations under the False Claims Act that Medtronic caused certain physicians to submit false claims to federal health care programs for a medical procedure known as “SubQ stimulation,” the Justice Department announced today.  Medtronic Inc. is a medical technology company based in Minnesota.

“Today’s settlement demonstrates our commitment to ensure that beneficiaries of federal health care plans, including Medicare recipients and military families, receive medical treatments that have been proven safe and effective,” said Acting Assistant Attorney General Joyce R. Branda of the Justice Department’s Civil Division.  “Targeting chronic pain patients with a medical procedure that lacks evidence of clinical efficacy wastes the country’s health care resources.”

The United States alleged that from 2007 through 2011, Medtronic knowingly caused dozens of physicians located throughout more than 20 states to submit claims to Medicare and TRICARE for investigational medical procedures known as SubQ stimulation that were not reimbursable.  In these procedures, Medtronic’s spinal cord stimulation devices were placed just beneath the skin near an area of pain, most often in the lower back, where the devices could provide electrical impulses to create a “tingling” sensation intended to alleviate chronic pain.  The United States alleged that even though the safety and efficacy of SubQ stimulation had not been established as required by the Food and Drug Administration (FDA), the company promoted this procedure by, among other strategies, arranging to have physician-customers attend Medtronic-sponsored “on-site training programs” regarding the use of Medtronic spinal cord stimulation devices for SubQ stimulation.

“Patients should be able to trust that their health care providers only use – and bill Medicare for – medical procedures that have been shown to be safe and effective,” said Special Agent in Charge Scott J. Lampert of the Department of Health and Human Services’ Office of Inspector General (HHS–OIG).  “Our agency will continue to pursue medical device makers that ignore requirements designed to protect patient health and federal health care programs.”

The civil settlement resolves a lawsuit filed under the whistleblower provision of the False Claims Act, which permits private parties to file suit on behalf of the United States for false claims and obtain a portion of the government’s recovery.  The lawsuit was filed by Jason Nickell, who formerly worked as a Medtronic sales representative.  Nickell will receive $602,000.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $23.5 billion through False Claims Act cases, with more than $15 billion of that amount recovered in cases involving fraud against federal health care programs.

The settlement with Medtronic was the result of a coordinated effort among the U.S. Attorney’s Office for the Western District of New York, the Civil Division’s Commercial Litigation Branch, HHS–OIG, the Defense Health Agency, the FDA’s Office of Chief Counsel and the FDA’s Office of Criminal Investigations.

The claims resolved by this settlement are allegations only and there has been no determination of liability.  The lawsuit is captioned United States ex rel. Nickel v. Medtronic, Inc. Civ. No. 09 – CV – 0203-S (W.D.N.Y.).

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Josh Sandberg

Josh Sandberg has been recruiting specifically in the musculoskeletal industry since 2004. Throughout this time, he has been able to have a positive impact on his client’s businesses. With an educational background in Business Management, Josh is adept to discern which people will be the best fit for the company he is searching for by understanding how candidates will incorporate with the company’s culture and operational nuances. His experience as an executive in a start-up business has granted him the ability to understand what is takes to thrive in a hands–on environment, where desire and dedication are paramount for success.

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