St. Jude Medical, two hospitals, pay nearly $4 million to settle false claims suit

After four years of investigation, heart-device maker St. Jude Medical, Inc., has agreed to return $3,898,300 to the federal government to settle the allegations that it paid illegal kickbacks to hospitals to gain market share for its cardiac devices. The whistleblower, a former Ohio-based regional sales manager, will receive $640,000.

The two hospitals accused of receiving the kickbacks--including "retroactive" rebates and other payments to induce future purchases of equipment they had previously purchased from competitors--also paid to settle the fraud allegations. Ohio-based Parma Community General Hospital paid $40,000; Kentucky-based Norton Healthcare paid $133,300.

St. Jude said Friday that the settlement does not admit liability or wrongdoing by the company. Likewise, a statement from Parma Community Hospital said that it believed it was in compliance with all federal regulations and never knowingly violated any law or regulation.

"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, in a statement. "This case illustrates the necessity of oversight of federal healthcare programs in the United States." According to the Justice Department, the False Claims Act has been used to recover approximately $3 billion since January 2009 in cases involving fraud against federal healthcare programs.

To learn more:
- read the press release
- see the article in The Star Tribune
- check out this piece in Twin Cities Business

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