Heart device maker, two hospitals pay nearly $4 million to settle qui tam suit alleging kickbacks

by Ben Vernia | June 4th, 2010

On June 4, the Department of Justice announced that St. Jude Medical, Inc., and hospitals in Ohio and Kentucky have agreed to pay approximately $3.9 million to settle kickback allegations first raised by a False Claims Act whistleblower. According to the Department’s press release:

St. Jude Medical Inc., a heart device manufacturer; Parma Community General Hospital; and Norton Healthcare have paid the United States $3,898,300 to resolve false claim allegations that St. Jude paid illegal kickbacks to two hospitals to secure heart-device business, the Justice Department announced today. The government alleges the kickbacks caused false claims to be submitted to federal health care programs in violation of the False Claims Act. The kickbacks included alleged rebates that were “retroactive” and paid based on a hospital’s previous purchases of St. Jude heart-device equipment and rebates that St. Jude paid for purchases of heart-device equipment sold by its competitors to induce purchases of similar equipment from St. Jude in the future.

Under the terms of the settlement, St. Jude, headquartered in St. Paul, Minn., will pay $3,725,000. Parma Community General Hospital, located in Parma, Ohio, is paying $40,000, and Norton Healthcare in Louisville, Ky., is paying $133,300. The government asserted that Parma and Norton were recipients of improper rebates from St. Jude.

The relator, Jerry Hudson, will receive $640,050 of the settlement (a 16.4% relator’s share).

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