St. Jude Medical to pay $3.7M to resolve allegations of illegal kickbacks

Working with an internal whistleblower, Attorney Warner Mendenhall, the Law firm of McLaughlin and McCaffrey, LLP, and Assistant United States Attorneys Alex Rokakis and Michelle Heyer have worked for four years to expose False Claims by St. Jude Medical, Inc. a cardiac device manufacturer.

As a result of the investigation, St. Jude has agreed to return $3,898,300 to the federal government to settle the allegations that St. Jude paid illegal kickbacks to hospitals to gain market share for its cardiac devices. The whistleblower will receive $640,000 as a reward for his assistance to the United States.

Warner Mendenhall stated that "St. Jude's marketing strategy interfered with the Doctors' independent decision making. These types of incentives to gain market share shortchange patient care options for doctors and patients alike.  These incentives have more to do with sales than patient well-being."  

The kickbacks included alleged rebates that were "retroactive" and paid based on a hospital's previous purchases of St. Jude heart-device equipment and rebates that St. Jude paid for purchases of heart-device equipment sold by its competitors to induce purchases of similar equipment from St. Jude in the future.

Under the terms of the settlement, St. Jude, headquartered in St. Paul, Minn., will pay $3,725,000. Parma Community General Hospital, located in Parma, Ohio, is paying $40,000, and Norton Healthcare in Louisville, Ky., is paying $133,300.

"Hospitals should base their purchasing decisions on what is in the best interests of their patients," said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. "We will act aggressively to ensure that choices about health care are not tainted by illegal kickbacks."  

"The Department of Justice is committed to requiring that federal healthcare monies are properly spent," said Steven M. Dettelbach, U.S. Attorney for the Northern District of Ohio. "This case illustrates the necessity of oversight of federal health care programs in the United States."

Information from the Department of Justice is here:

http://www.justice.gov/opa/pr/2010/June/10-civ-658.html

The Complaint can be found at http://www.docstoc.com/docs/39559633/US-ex-rel-Hudson-v-St-Jude-Medical.