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What’s New/Significant
The Department of Justice announced that Medtronic USA Inc. has agreed to pay $8.1 million to resolve allegations that it violated the False Claims Act by paying kickbacks to induce a South Dakota neurosurgeon to use certain Medtronic products.
Medtronic also agreed to pay an additional $1.11 million to resolve allegations that it violated the Open Payments Program of the Centers for Medicare & Medicaid Services (CMS) by failing to accurately report to CMS payments it made to the neurosurgeon. The Open Payments Program was established by the Affordable Care Act and requires pharmaceutical and medical device manufacturers to disclose to CMS payments and other transfers of value to certain health care providers.
Allegations
The government alleged that from 2010 – 2019, certain Medtronic employees caused the submission of false or fraudulent claims to government health care programs. During that time, the employees worked with Dr. Wilson Asfora, a South Dakota neurosurgeon, to arrange and pay for social events at Carnaval Brazilian Grill, a restaurant that Dr. Asfora owned and that was experiencing a business slowdown. Medtronic held more than 130 events at the restaurant, knowing that the payments made for those events would benefit Dr. Asfora and induce him to use Medtronic’s SynchroMed II intrathecal infusion pump. To hide this inappropriate conduct, Medtronic sales personnel falsely represented the social events as educational programs. The events included expensive meals and alcohol, including multicourse tasting menus with wine pairings. Medtronic sales personnel allowed Dr. Asfora to select and invite the attendees, who included his social acquaintances, business partners, favored colleagues, and potential and existing referral sources for Medtronic products. Spouses and significant others also attended the social events, and Medtronic paid for some of their meals and drinks.
The government further alleged that Medtronic sales personnel withheld from the Medtronic compliance organization relevant information regarding Dr. Asfora’s ownership of the restaurant and his requests that Medtronic pay for the events held there. This failure resulted in an underreporting to CMS of the payments made to, or at the direction of Dr. Asfora. Following an internal review and the federal government’s investigation into the conduct, Medtronic terminated the employment of the sales representatives and sales manager involved, and disciplined 12 other employees who were aware of the conduct or attended events.
Scope of Settlement