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Whistleblower accuses Medtronic of kickback scheme at VA hospital that led to unnecessary procedures

por John R. Fischer, Senior Reporter | July 18, 2023
Business Affairs Cardiology
Medtronic is accused of bribing a Kansas VA hospital to buy excessive amounts of its equipment over competitors.
A former sales manager for Becton Dickinson says that Medtronic bribed physicians for nearly a decade at a Kansas VA hospital into buying atherectomy devices for peripheral artery disease, wasting millions in taxpayer dollars and leading to medically unnecessary procedures that he believes could have left patients with long-term complications.

In a False Claims Act lawsuit filed in 2017, Tom Schroeder, who served as a BD U.S.-area vice president, alleges that since at least as early as 2007, Medtronic sales representatives offered kickbacks that included expensive meals to staff at the Robert J. Dole Veterans Affairs Medical Center in Wichita, and to VA doctors it contracted to induce them into buying their equipment over competitors. The catheterization lab that oversaw athrectomy surgeries ended up with a "grossly excessive inventory" and used these devices unnecessarily at a level Schroeder told CNBC News that he never saw before.

According to unsealed text messages from a Medtronic employee that Schroeder included in his case, a patient was implanted with 17 devices.

“If you read those text messages and you’re not pissed off and you’re not angry and you’re not sad for those veterans, I don’t know what to say,” he said.

But Medtronic called the allegations "false," saying there is no "firsthand knowledge" of problems related to these procedures, which Schroeder admitted under oath, or evidence to show that physicians received additional compensation. Company spokesperson Boua Xiong said the company will "defend the litigation as it moves ahead."

The case, United States ex rel. Schroeder v. Medtronic, Inc., was under seal until 2022, when the government refused to intervene. Medtronic filed an unsuccessful motion to dismiss in November 2022.

Schroeder alleges that Medtronic employees had a financial incentive to promote sales, that company leaders were aware of the misconduct, and that the company enacted a similar scheme at nonprofit Hutchinson Regional Medical Center. One sales rep involved is still employed there, he says.

The Dole VA, which launched an investigation in 2018, shut down the cath lab after finding that it spent roughly “$5 million a year more” than necessary, more than some of the largest veteran medical facilities, and that doctors implanted an average of seven devices per patient, with one receiving 33.

Medtronic’s atherectomy devices list amputations and death as adverse outcomes. The Dole’s VA investigation found amputations increased sixfold during this period, but no direct correlation to the procedures.

In its own investigation, the VA’s Office of Inspector General found “dozens of pages of dinner receipts” in internal Medtronic records, and a large increase in purchases from Dole VA for its solutions, yet no quality of care issues. Its investigation is ongoing, and it is assessing 59 veterans’ medical records for “possible substandard care issues,” according to CNBC.

In 2021, the FDA issued a Class I recall for one Medtronic atherectomy device following 163 complaints and 55 injuries, but no deaths.

The largest portion of Medtronic’s $31 billion sales revenue comes from cardiovascular devices. According to its 2022 annual filings, the company made nearly $2.4 billion, in part from devices for peripheral vascular disease, nearly 8% of its total sales. It told CNBC that it does not share details for specific device sales.

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