Medtronic to pay $9.2M fine on kickback charges regarding South Dakota neurosurgeon

Medtronic will pay the federal government $9.2 million to resolve allegations that it violated the U.S. False Claims Act and Medicare rules in reportedly providing kickbacks to a South Dakota neurosurgeon in exchange for using one of the medical device maker's products.

Medtronic — managed out of Fridley offices — was accused of paying for social events at a restaurant owned by neurosurgeon Wilson Asfora. U.S. Justice Department investigators said the Minnesota-run med-tech giant paid for meals and drinks at Asfora's Carnaval Brazilian Grill in order to convince Asfora to use the company's SynchroMed II intrathecal infusion pump.

Over a nine-year period, Asfora allegedly invited professional acquaintances to more than 100 events paid for by Medtronic that offered the potential for referrals for other business.

In paying an $8.1 million fine for the restaurant events and an additional $1.1 million for violating Medicare and Medicaid rules, Medtronic admitted no liability. But the company fired a sales representative and a sales manager and disciplined a dozen other employees for alleged misconduct, a Justice Department news release said.

"Kickbacks undermine the integrity of federal health care programs and increase costs borne by taxpayers," Acting Assistant Attorney General Jeffrey Bossert Clark of the department's civil division said in a statement included in the release.

Clark added that the investigation into Medtronic showed the government's "commitment to ensure that medical device manufacturers do not use improper financial relationships to influence physician decisionmaking."

The federal Anti-Kickback Statute outlaws direct or indirect offers to pay for or provide anything of value to persuade doctors to use products or services covered by federal health care programs.

"Outside of a small number of sales employees, DOJ's investigation did not find that Medtronic was aware of this alleged misconduct at the time it occurred," Medtronic spokesman Ben Petok said in an e-mail. "Upon investigation of this conduct, which violated the company's policies, Medtronic took various remedial steps, including termination and other disciplinary action against employees directly or peripherally involved, and enhancing relevant training."

Jim Spencer • 202-662-7432