Medtronic to pay $51 million to resolve U.S. medical device probes

BOSTON (Reuters) – Medtronic Plc said on Tuesday it would pay $50.9 million to resolve U.S. Justice Department probes into how companies it later acquired marketed medical devices, including one meant to treat a vascular defect in the brain.

As part of the accord, ev3 Inc, which Medtronic now owns, will pay $17.9 million and plead guilty to a charge related to its marketing of a neurovascular medical device for unproven and potentially dangerous uses, federal prosecutors in Boston said.

The misdemeanor charge relates to the Onyx Liquid Embolic System, which the U.S. Food and Drug Administration in 2005 approved for the limited use of blocking blood flow to arteriovenous malformations in the brain.

Prosecutors said that ev3’s sales staff from 2005 to 2009 marketed Onyx for other unapproved uses outside of the brain and continued to do so even after FDA officials warned ev3 executives in 2008 about safety concerns they had.

“ev3 disregarded laws designed to protect patient safety,” U.S. Attorney Andrew Lelling in Boston said in a statement.

Medtronic in a statement said it was also resolving two other Justice Department investigations involving conduct that largely concluded before it acquired Covidien Plc in 2015. Covidien itself bought Minnesota-based ev3 in 2010.

In one case, the Justice Department alleged Covidien paid kickbacks to hospitals to induce them to use its Solitaire mechanical thrombectomy device, which is intended to restore blood flow in certain stroke patients.

The scheme resulted in false claims for payment being submitted to the government healthcare programs Medicare and Medicaid, the department said.

The $13 million settlement in that case stemmed from a lawsuit filed in a federal court in California in 2015 by a former Covidien employee, Jeffrey Faatz, under the False Claims Act.

That law allows whistleblowers to sue companies on the government’s behalf to recover fraudulently paid-out taxpayer money. For his role in the case, Faatz will receive a nearly $2.02 million reward, the Justice Department said.

Medtronic said it had also agreed to pay $20 million to resolve an investigation related to various market-development and physician-engagement activities involving Covidien and ev3.

Medtronic said it did not admit wrongdoing as part of the $13 million and $20 million settlements. In the Boston case, ev3 will plead guilty to introducing adulterated medical devices into interstate commerce.

“Medtronic is committed to maintaining the highest standards of ethical conduct and compliance with all applicable regulatory guidelines,” Medtronic said.

The case is U.S. v. ev3 Inc, U.S. District Court, District of Massachusetts, No. 18-cr-10461.

Reporting by Nate Raymond in Boston; Editing by Marguerita Choy and Peter Cooney

Our Standards:The Thomson Reuters Trust Principles.

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