St. Jude Medical Inc. has reached a $3.65 million settlement with the U.S. government over claims that the medical device manufacturer falsely inflated the cost of replacement pacemakers and defibrillators bought by the Department of Defense and Veteran Affairs. The charges were brought by two whistleblowers who will receive $730,000 of the settlement, a figure that represents 20% of the total sum recovered.
According to charges made in the case, St. Jude actively marketed its pacemakers and defibrillators to the Departments of Defense and Veteran Affairs at an inflated cost by failing to apply credits to devices that had to be removed or replaced while still under product warranties. The settlement will resolve these claims, as well as allegations that St. Jude promoted the life span of their overpriced products to convince care givers to implant their devices, specifically making reference to the credits that would be given if a device needed replacement while still under warranty.
Furthermore, the suit claims that St. Jude sales reps knowingly prevented the return of failed devices, even though they were aware that providers could only receive the promised credits if the pacemakers and defibrillators were sent back to the manufacturer. Because of these behaviors, invoices submitted to the government overcharged for devices since the heavily promoted and promised credits were never delivered.
Acting Assistant Attorney General Stuart Delery said, "If medical device manufacturers are actively concealing warranty credits from the government, the Department (of Justice) will use all the tools at its disposal to hold them accountable." Representing the Veterans Affairs Department, Special Agent in Charge Jeffrey G. Hughes said, "The Department of Veterans Affairs, Office of Inspector General continues with its partners at the U.S. Attorney's Office and other federal investigative agencies to combat fraud, waste and abuse within the health care industry."