Medtronic Inc. Settles Fraud Allegations for $75 million

 

Medtronic Inc.’s spinal unit has agreed to pay the government $75 million in order to settle false claim submission allegations.  The allegations were originally against Kyphon Inc., which was purchased by Medtronic Spine in November.  Medtronic Spine bought Kyphon Inc. for $4.2 billion, even after the allegations had been made.  They were aware of the lawsuit allegations before acquisition.

The allegations were brought forward by two former Kyphon employees.  According to one, when he realized they were involved in Medicare fraud, he spoke with the company’s vice president of reimbursement – to no avail.  Eventually, he accepted another job at a different company, for less money. 

The specific fraud allegations involved Kyphon’s submission of claims for a number of kyphoplasty procedures.  The Kyphoplasty procedure is a treatment for spine compression fractures.  This treatment is normally an outpatient procedure and only minimally invasive.  Kyphon Inc., however, was accused of marketing this procedure as a more expensive inpatient treatment, causing Medicare to pay more for some of these surgeries. 

The lawsuit, filed under the Federal False Claims Act, will also award two whisleblowers in the case $14.9 million.    It also required Medtronic Spin to agree to follow Medicare regulations in all future claims.  Although Medtronic Inc. agreed to pay a settlement, the company admitted no wrongdoing.