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Medtronic Pays $4.4 Million to Settle Country-of-Origin Lawsuit

Chris Newmarker

April 3, 2015

2 Min Read
Medtronic Pays $4.4 Million to Settle Country-of-Origin Lawsuit

Medtronic made no admission of guilt in the settlement with the U.S. Department of Justice, which claimed Medtronic misled the military about the origin of its medical devices.

Chris Newmarker

Medtronic will pay $4.4 million to settle a federal whistleblower lawsuit that claimed the medtech giant violated the False Claims Act by claiming to the military that devices made in China and Malaysia were made in the United States.

A Medtronic spokeswoman told media outlets including the Star Tribune of Minneapolis that the Dublin, Ireland-based company makes no admission that any of its activities were improper or unlawful. The company says most of its products are made in the United States or by trading partners such as Ireland and Mexico.

In general, the U.S. Trade Agreements Act of 1979 requires companies selling products to the United States government to make the products in the U.S. or in another designated country. China and Malaysia are not on the designated country list.

"Today's settlement demonstrates our commitment to ensure that our service members and our veterans receive medical products that are manufactured in the United States and other countries that trade fairly with us," acting Assistant Attorney General Benjamin C. Mizer, of the Justice Department's Civil Division, said in a news release.

Specific Medtronic products at issue included anchoring sleeves sold with cardiac, instruments and devices used in spine surgeries, and a handheld patient assistant used with a wireless cardiac device.  Devices were sold from 2007 through 2013, and in the case of patient assistant, the first nine months of 2014.

The three whistleblowers in the case will receive a total of $749,700 of the recovered funds.

The settlement comes about two months after Medtronic agreed to pay the U.S. government $2.8 million to resolve accusations that it encouraged off-label use of a spinal cord stimulation device.

Also in February, Medtronic subsidiary ev3 settled with the U.S. for $1.25 million to resolve claims that its predecessor Fox Hollow Technologies caused certain hospitals to submit false claims to Medicare. According to prosecutors, the false claims involved unnecessary inpatient admissions related to minimally-invasive atherectomy procedures.

It is worth noting that Medtronic, which merged with Covidien in January, has a combined operation that has pulled in about $27.2 billion in sales annually. So the settlements only make up a tiny fraction of Medtronic's sales.

Refresh your medical device industry knowledge at BIOMEDevice Boston, May 6-7, 2015.

Chris Newmarker is senior editor of Qmed and MPMN. Follow him on Twitter at @newmarker.

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