St. Jude Medical will pay $3.65 million in settlement to resolve civil allegations under the False Claims Act that the company inflated the cost of replacement pacemakers and defibrillators purchased by the Departments of Defense and Veterans Affairs. St. Paul, Minn.-based St. Jude Medical develops, manufactures and distributes cardiovascular and implantable neurostimulation medical devices. The settlement resolves allegations that St. Jude actively marketed its pacemakers and defibrillators by touting the generous credits available should a device need to be replaced while covered under warranty.

At the same time, it appears St. Jude knew that it failed to grant appropriate credits to the purchasers of devices in a large number of cases where a product was replaced while still under warranty. As a result, the United States contended that St. Jude submitted invoices to Department of Veterans Affairs hospitals and Department of Defense military treatment facilities that overstated the cost for replacement pacemakers or defibrillators.

The civil settlement resolves allegations initially brought by two whistleblowers in federal court in the District of Massachusetts under the qui tam (whistleblower) provisions of the False Claims Act. As we have previously stated, this Act allows private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of the resolution, the whistleblowers in this case will receive $730,000 from the settlement amount.

Source: The Corporate Crime Reporter