Medtronic can’t slip whistleblower’s CRM suit

Medtronic (NYSE:MDT) must face a whistleblower’s lawsuit accusing it of running a kickbacks scheme to encourage doctors to implant its cardiac rhythm management devices.

Plaintiff Cathleen Forney worked for Fridley, Minn.-based Medtronic for 16 years until she was fired from her role as a district service manager for the cardiac & vascular division in 2012, according to court documents. Forney alleged in a 2012 lawsuit brought under the False Claims Act that the company provided free services to hospital purchasing decision-makers “to persuade healthcare providers to purchase Medtronic devices.”

The service incentives covered device checks and interrogations, implant services and practice management consulting, according to the documents. Medtronic moved for summary judgment to have the suit tossed on the grounds that Forney’s allegations were already publicly known.

The FCA’s public disclosure bar was altered when the Affordable Care Act was put in place in 2010, restricting the material that counts as public disclosure and broadening exceptions allowed under the bar if the whistleblower is deemed an original source.

Judge Edward Smith of the U.S. District Court for Eastern Pennsylvania ruled this week that although “the vast majority of the relator’s allegations of fraud were contained in valid prior public disclosures,” Forney still qualifies as an original source.

“Thus, despite the presence of prior public disclosures that advanced substantially the same allegations of fraud as the relator does here, the court denies the motion for summary judgment,” Smith wrote June 4 in a 36-page ruling.

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