The 10 Biggest Medtronic Lawsuits in Company History
Medtronic is one of the largest global producers of medical devices and therapies, e.g., pacemakers, insulin pumps, and diabetes therapies. According to Investopedia, it serves over 72 million people yearly across 150 countries. As crucial as Medtronic’s services are to people globally, one cannot help but think of its lawsuits throughout the years. The company has had to part with huge sums of money for settlements. As you read on, you will understand why it had to pay plenty of money in some lawsuits. Without further ado, here are the ten biggest Medtronic lawsuits in company history, starting with the least to the most expensive ones.
10. Medtronic Once Again Found Itself Having to Pay $75,000 in a Discrimination Lawsuit for Discrimination in 2020
This lawsuit was filed by the U.S. Equal Employment Opportunity Commission (EEOC) after the company violated federal law by firing its temporary employee. The employee worked as a forklift driver and waste hauler. This employee was born with one kidney, which was under-formed. As a result, the worker had to miss a few days of work to attend to her health issues caused by her disability. Later, she returned to work with a doctor’s note.
Medtronic claimed that she violated her attendance policy and promptly sacked her. Besides firing her unjustly, EEOC claimed that the company made her position temporary. That meant the company could drop her anytime it felt like it. Medtronic was ordered to pay the worker the settlement fee. Also, the company was required to maintain and distribute a workplace accommodations policy and provide Americans with Disabilities Act (ADA) training to all staff responsible for implementing Medtronic’s attendance and leave policies.
9. Medtronic Had to Pay $290,000 in a Wage Discrimination Lawsuit Settlement in 2013
In court, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) claimed that a Medtronic federal contractor discriminated against 78 entry-level Hispanic senior production associates by paying them less than their white counterparts. Besides fighting for the company to pay the $290,000 settlement fee in back wages, OFCCP filed a consent decree. Under the decree, Medtronic would also pay the affected workers for pay disparities dating back to 2008.
Additionally, the company was required to conduct training on equal employment opportunity programs for people involved in making decisions about compensation. It is not uncommon for people to get underpaid without realizing it. That is because some of them may not be aware of the laws regarding proper payment. In this case, the company was able to underpay the workers for a long time because it did not reveal to anyone how much they were getting paid. By making the payment process opaque, you can pay workers any amount you like. After the settlement, the company was asked to come up with measures to prevent such payment discrepancies.
8. Medtronic Agreed to Pay $2.8 Million to Resolve False Claims Act Allegations Related to “SubQ Stimulation” Procedures in 2015
Medtronic was accused of causing certain physicians to submit false claims to federal health care products for a medical procedure known as “SubQ stimulation.” The American government claimed that the company had been doing this from 2007-2011. In this procedure, Medtronic’s spinal cord devices are placed just beneath the skin near an area of pain, mostly in the lower back. The devices produce electrical impulses which create a tingling sensation intended to reduce chronic pain. These false claims were submitted to Medicare and TRICARE and were not reimbursable.
Jason Nickell, who previously worked as a Medtronic sales representative, filed this lawsuit. Since it was filed under the False Claims Act, he received $602,000 from the settlement paid by Medtronic. A lot of parties were involved in the settlement matter, e.g., the U.S. Attorney’s Office for the Western District of New York, the Defense Health Agency, the Civil Division’s Commercial Litigation Branch, HHS–OIG, the FDA’s Office of Chief Counsel and the FDA’s Office of Criminal Investigations. The government claimed that this lawsuit was necessary to combat health care fraud since it had made the commitment to combat the vice in 2009.
7. It Had to Pay $ 9.2 Million to the Government in 2020 for Improper Payment to a South Dakotan Neurosurgeon
In the years from 2010-2019, some Medtronic employees submitted fraudulent claims to government healthcare programs. During this period, the employees worked with Dr. Wilson Asfora, a South Dakotan neurosurgeon, to arrange and pay for social events at a restaurant called Carnaval Brazilian Grill. Wilson owned this restaurant, and it was experiencing a business slowdown. Medtronic decided to hold at least 130 events in the restaurant. The company knew the payments made to the event would be enough to induce the neurosurgeon to use Medtronic’s SynchroMed II intrathecal infusion pump. To conceal this misconduct, the Medtronic sales personnel falsely claimed that the social events were educational programs.
Furthermore, the sales personnel withheld information from the Medtronic compliance organization concerning Dr. Asfora’s ownership of the restaurant and his requests that Medtronic pays for the events held there. As a result, the doctor was paid less. The federal government thus accused the organization of violating the False Claims Act by paying kickbacks to induce the neurosurgeon to use Medtronic products and violating the Open Payments Program of the Centers for Medicare & Medicaid Services by not reporting payments made to Wilson. Medtronic had to pay $8.1 million for paying kickbacks and $1.11 million for not reporting payments, which adds up to $9.2 million.
6. Medtronic Had to Pay a Settlement of $9.9 Million to the American Government for False Claims in 2014
The government accused Medtronic of lying about the country of origin of its products. It sold its equipment to the Department of Veterans Affairs and the Department of Defense, claiming that they were from the United States. In actual sense, the products were manufactured in China and Malaysia. Besides lying, the company was guilty of contravening the Trade Agreements Act of 1979.
The act stipulates that equipment sold to government agencies must be made in the United States. Examples of such equipment include spine surgery equipment and wireless cardiac devices. While paying this settlement, it was discovered that Medtronic offered kickbacks to physicians to use its pacemakers and defibrillators. This is yet another instance of the company using kickbacks for its products to sell.
5. Medtronic Had to Settle $12 Million to Five States for Using Deceptive Marketing Strategies in 2012
The five states that sued Medtronic were Oregon, Massachusetts, Illinois, Washington, and California. They accused the company of misleading doctors and the public regarding its Infuse bone graft. Medtronic worked in secret to manipulate research articles on Infuse. The articles were falsified to give an impression that there was high demand for Infuse. Also, the company made it seem like Infuse was the best bone graft.
From the previous entry, we know how Infuse turned out. Besides ghost-writing the articles, Medtronic also paid doctors $210 million to falsify the articles. The company asked the doctors to downplay or ignore the side effects of Infuse. Medtronic decided to pay the settlement to the five states but still denied any wrongdoing. After making the settlement, the company was asked to follow certain new regulations. First, it had to have specific requirements on how they promote clinical trial information and disseminated medical journal articles related to Infuse. Plus, it was ordered to make Infuse trial data public on a government website.
4. The Company Had to Pay a Settlement of $54.5 Million for Misleading Investors
Besides Kyphon, Medtronic has another subsidiary company called HeartWare. HeartWare repeatedly misled class-action investors about the safety of its heart pumps. Heart pumps use a propeller-like system to push a person’s blood when the heart’s main pumping chamber becomes too weak to work. In general, these devices have always had problems. Past studies revealed that they would get gummed up with blood clots. HeartWare claimed that its blood pumps would not cause such problems. To no one’s shock, their blood pumps were ineffective.
Three out of eleven European patients who bought the device experienced the problem. Medtronic agreed to pay the settlement on the condition it does not admit any wrongdoing. The investors who sued the company were nonetheless happy with the settlement. They were happy they could use part of it to pay attorneys’ fees. Even though the attorneys were paid, they were faced with a challenge. They were unable to determine whether HeartWare was deceptive or ignorant regarding its heart pumps.
3. Its Subsidiary Company, Kyphon Inc. Had to Pay a Settlement of $75 Million to the Federal Government in 2008 for False Claims
Two Kyphon employees accused Medtronic of submitting false kyphoplasty procedure claims to Medicare. It happened as soon as the company acquired Kyphon Inc. in 2007 for $3.9 billion. Kyphoplasty procedures are used to treat compression fractures of the spine caused by cancer or osteoporosis. Kyphon had been engaging in a marketing scheme that led to certain hospitals billing Medicare for some kyphoplasties performed on an inpatient basis. This was expensive for Medicare since it was supposed to pay for clinically appropriate outpatient kyphoplasty treatments that were less costly. As a result, Medicare would pay more for certain inpatient kyphoplasty procedures, which meant Kyphon would earn thousands of dollars illegally. By paying for more than what was necessary, Medicare would potentially run out of funds to pay for appropriate medical treatments.
Medtronic was sued under the federal False Claims Act. This act allows private citizens to bring lawsuits on behalf of the American government and get a share of the settlement. Not only did the $75 settlement go to the Kyphon employees, but to the government since it was considered as a return of taxpayers’ monies. After the settlement, Kyphon had to enter into an agreement with the U.S. Department of Health and Human Services to comply with Medicare regulations and policies in the future.
2. It Had to Settle Defective Marquis Defibrillator Lawsuits for $114 Million in 2008
The Marquis defibrillator is a Medtronic product that provides shocks to stop hearts from dangerous rapid beating. Such a product is helpful to people at risk of sudden cardiac death, which is one of the leading causes of death in the United States. According to AER, around 180,000–300,000 sudden cardiac deaths (SCD) occur in the US annually.
However, the product was defective, further putting its patients at risk of death or injury. Consumers were unhappy with the product claiming it would malfunction, and sued Medtronic. The company paid out the amount to settle product liability lawsuits but refused to admit liability in the litigation. In 2005, Medtronic had warned its clients that its defibrillators had battery shorting issues. Following this declaration, about 11,000 machines had to be replaced. This lawsuit was not just about the company selling defective products. The plaintiffs claimed that Medtronic was aware for a long time that its defibrillators were defective yet chose to sell them anyway.
1. The Company Received 1,000 Lawsuits Regarding the Failure of its Infuse Product in 2021 and Had to Pay $282 Million
Infuse is a bone graft from Medtronic that helps stimulate natural bone formation. It is supposed to stimulate bone growth since it is composed of synthetic proteins. Bone grafts are usually effective, yet Infuse was not. People who used Infuse suffered a lot of injuries. According to Drug Watch, the injuries they experienced included severe pain, breathing difficulties, urinary problems, male sterility, etc. Following the failure of the product, the company received 1,000 lawsuits, and it decided to pay $22 million, which amounts to nearly $25,000 per claimant. Additionally, the company set aside between $120 million and $140 million to cover an extra 3,800 claims and general costs associated with such settlements, which add up to $282 million.
Conclusion
Medtronic’s numerous lawsuits serve as a cautionary tale. Despite being successful in producing and selling medical equipment, it has proved to be a failure in how they do things. Most of these lawsuits could have been avoided had the company sold working equipment and avoided discriminating against its workers. Is there a chance it will find itself in another lawsuit? Let us hope not.
