(CN) – St. Jude Medical, which manufacturers devices like pacemakers and catheters, will pay the United States $16 million to settle allegations that it gave physicians kickbacks in exchanging for using their products, the Justice Department announced.
The Minnesota device maker allegedly paid doctors and hospitals up to $2,000 per patient who was prescribed and used St. Jude medical products, including pacemakers and mapping and visualization systems.
Disguised as post-marketing studies, the payments allowed St. Jude’s devices to be implanted in thousands of patients, netting the company millions in revenue, federal investigators said.
Physicians and hospitals were also allegedly given airplane tickets, sporting tickets, conference fees and fine wines.
“When companies pay kickbacks to health care providers in order to pad their bottom line, it taints the information patients rely on to make informed choices about their health,” said Tony West, assistant attorney general for the Justice Department’s civil division.
The company’s Minneapolis shareholders filed suit against St. Jude in late September, demanding that corporate executives foot the bill for the then-$3.7 million dollar settlement. The case was soon consolidated with a similar action, and Magistrate Judge Susan Nelson ordered the plaintiffs to file a consolidated complaint by March 3, 2011.
Justice department officials credited the settlement to a health care fraud prevention initiative, spearheaded in May 2009 by Attorney General Eric Holder and Secretary of Health and Human Services Kathleen Sebelius.
Whistleblower Charles Donigian, a realtor who initiated the action under the False Claims Act, will receive $2.64 million from the settlement. Prosecutors could not make available a copy of the settlement at press time.