Medtronic Whistleblower Files Suit Against Physicians
Medical device maker Medtronic settled a whistleblower lawsuit in 2006 by agreeing to pay $40 million while admitting no wrongdoing. In that complaint, Medtronic allegedly gave surgeons incentives to use its products, including entertainment at strip clubs and paying for lap dances.
That suit claimed that Medtronic, one of the largest medical device makers in the USA, made payments of $50 million in just four years to physicians doing implant surgery. One surgeon in Wisconsin was paid$400,000 for 8 days of "consulting" work. A surgeon in Virginia was compensated with nearly $700,000 in fees for nine months of work in 2005.
Now the same whistleblowers have filed against 100 spine physicians and the suit claims they received unwarranted Medicare money and kickbacks from Medtronic to use their devices. Plaintiffs and former employees, Jacqueline Kay Poteet and Bobbie Vaden, accused more than 130 orthopedic spine surgeons, neurosurgeons, medical practices and distributors of taking kickbacks from Medtronic for using their products, promoting off-label use of FDA-approved medical devices and filing Medicare claims in violation of the False Claims Act, among other things.
The whistleblower is Ami P. Kelley, a former senior legal counsel for the company’s Memphis, Tenn. based spinal products division. The lawsuit describes boondoggles like the “Alaska Think Tank,” a five-day-all expense paid trip to Alaska where doctors were supposed to present case studies to each other. Instead, there were no prepared presentations and the physicians drank and partied together. Medtronic paid for another trip to the Ritz-Carlton in Cancun, Mexico for physicians and their families. Participants were offered free golf, tours of Mayan ruins and parasailing. Similar education events were held in New Orleans and the education was described as being “light on content” but heavy on Mardi Gras drinking, partying and beads.
Minneapolis medical device industry attorney Mark Duval says, “this is a sour grapes lawsuit by two qui tam relators who apparently didn’t get any money when the government settled the first case against Medtronic for $40 million. So they are taking another bite at the apple and sticking it to Medtronic by going after their physician customers.”
In its web site response, Medtronic said employees follow the company’s ethical standards in all arrangements with physicians, including consulting and service agreements and appropriate travel and entertainment.
The former Medtronic employees, who brought the lawsuit, allege that the amount of the “consulting fee” paid by Medtronic to each physician is directly related to the gross purchase of spinal implants made by each physician. They also claim that the devise “INFUSE” (a bone graft), was used for off-label (not FDA approved) use at least 75% of the time. While not illegal for the physician, the FDA does prohibit companies from marketing off-label use of drugs or devices. Medtronic spinal division revenue is over $2 billion annually.
This is one of the first lawsuits that target this many physicians. Devise industry attorney Duval says, “This is a wake up call to the medical community that they have to take compliance seriously. Physicians and their medical societies and clinics and institutions will demand more scrutiny over relationships and will, in some cases, not allow physician/industry collaborations.”
The shake up is just beginning.