Medtronic’s Covidien to pay $20m to settle ClosureFast kickback allegations

Medtronic‘s (NYSE:MDT) Covidien has agreed to pay approximately $20 million to resolve kickback allegations related to the sale and promotion of its ClosureFast radiofrequency ablation catheters.

The Fridley, Minn.-based company agreed to pay approximately $17.5 million to the U.S. to settle alleged violations of the False Claims Act and an additional $1.5 million to California and $1 million to Florida for claims settled by state Medicaid programs, according to a U.S. Department of Justice release.

“Today’s settlement serves as an important reminder to those in the health care community that unlawful kickbacks come in many forms and are not limited to monetary payments to providers. Providing free or discounted services to health care providers to induce the use of certain items or services can lead to excessive and unnecessary treatments, and drive up health care costs for everyone,” DoJ Civil Division Assistant Attorney General Jody Hunt said in a prepared statement.

In the case, the DoJ alleged that Covidien illegally supplied practice development and market development support to healthcare providers in California and Florida to promote the use and purchasing of its ClosureFast radiofrequency ablation catheters.

The allegations include claims that Covidien provided customized marketing plans, scheduled and conducted “lunch and learn” meetings and dinners and engaged in other free or discounted services to promote the use of its ClosureFast device.

The ClosureFast catheters, which are intended for use in treating venous reflux disease, were billed to Medicare and to the California and Florida Medicaid systems, according to the DoJ release.

“The government contended that Covidien provided discounted or free services to health providers – and so hoped to evade kickback charges. Companies seeking to buy clients through such arrangements can expect to pay a steep price,” Dept. of Health and Human Services Special Agent In Charge for the Office of Inspector General Steven Ryan said in a press release.

“Kickback schemes don’t just victimize those directly involved, they undermine the public’s trust in our healthcare system and drive up costs for everyone. This significant settlement sends a clear message: healthcare providers who engage in this kind of activity and put their own greed before the needs of their patients will be aggressively pursued by the FBI and our federal partners,” FBI San Francisco Special Agent in Charge John Bennett said in prepared remarks.

Since December, the medical giant has agreed to pay a total of $88.8 million to handle DoJ investigations, paying $17.9 million in an ev3-related off-label marketing case and $50.9 million to settle a number of probes into marketing activities from ev3 and Covidien, pre-acquisition.

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