Medtronic Settles for $9.2M After Sponsoring Parties at Doctor's Restaurant

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Medtronic USA will pay $8.1 million to resolve allegations that it violated the False Claims Act by paying kickbacks to a South Dakota neurosurgeon to use certain Medtronic products. 

According to the Department of Justice, the Minnesota-based medical device maker also agreed to pay an additional $1.11 million to resolve allegations that it violated the Open Payments Program by failing to accurately report payments to the neurosurgeon to the Centers for Medicare & Medicaid Services (CMS). 

According to the settlement, announced Thursday, Medtronic allegedly agreed to pay for social events at Carnaval Brazilian Grill, a restaurant owned by Wilson Asfora, M.D. Medtronic knew Asfora owned the restaurant and paid for scores of expensive meals.

Medtronic allegedly made the payments to induce Asfora to use Medtronic’s SynchroMed II intrathecal infusion pumps, which are implantable devices used to deliver medication to patients.

According to the DoJ, Medtronic sponsored events at Asfora’s restaurant that were social gatherings for the doctor's social acquaintances, business partners, favored colleagues, and potential and existing referral sources.

Over a nine-year period, Medtronic allegedly paid for more than one hundred events at Asfora’s restaurant.

The claims resolved by the settlement are allegations, and there has been no determination of liability.

“Kickbacks undermine the integrity of federal healthcare programs and increase costs borne by taxpayers,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Civil Division. “This case demonstrates the Department of Justice’s commitment to ensure that medical device manufacturers do not use improper financial relationships to influence physician decision-making.” 

This settlement also resolves Medtronic’s liability under CMS’ Open Payments Program, which was established by the Affordable Care Act and requires medical device manufacturers like Medtronic to disclose to CMS certain payments or other transfers of value to a physician like Asfora. The United States alleged that Medtronic made payments to Asfora’s restaurant at his request, knowing that Asfora owned the restaurant, but underreported those payments to CMS.

Asfora and two of his other companies are defendants in a separate FCA lawsuit in which the United States filed a complaint in November 2019, alleging that Asfora received kickbacks to use certain implants in his spinal surgeries. That pending case is captioned United States ex rel. Bechtold, et al. v. Asfora, et al., No. 4:16-cv-04115-LLP (D.S.D.).

“We expect doctors to make medical decisions based on what is best for their patients, not what is best for their bank accounts,” said U.S. Attorney Ron Parsons for the District of South Dakota. “The quality of medical care is eroded – and patients and their families suffer – when companies and physicians enter into these sorts of under the table schemes to create illegal financial incentives to increase the use of medical devices.”

The government’s pursuit of these matters illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800‑HHS‑TIPS (800-447-8477).

The settlement was the result of an investigation by the Department of Justice’s Civil Division, the U.S. Attorney’s Office for the District of South Dakota, and HHS-OIG. As part of the settlement, Medtronic agreed to cooperate with the Department’s investigations of and litigation against other parties, and the device maker took remedial action once it learned of the wrongdoing, including terminating a sales representative and sales manager and disciplining twelve other employees involved in the alleged misconduct.

The Anti-Kickback Statute prohibits directly or indirectly offering or paying anything of value to induce the referral of items or services covered by Medicare, Medicaid, TRICARE, and other federal healthcare programs.

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