Recently, a whistleblower lawsuit against Medtronic, along with many exhibits, was unsealed, alleging that the company operated a bribery scheme in a Veterans Administration (VA) hospital. According to the lawsuit, Medtronic paid illegal remuneration to employees at the Robert J. Dole VA in Kansas, causing the VA to purchase an excessive number of medical devices, provide unnecessary medical treatment, and promote off-label use of devices on Dole VA’s veteran patients, all in violation of the False Claims Act and Anti-Kickback Statute.
The whistleblower worked for a competitor of Medtronic as a sales manager and then later an area vice president. During visits to the Dole VA hospital, he heard rumors that Medtronic sales representatives were bribing VA staff members to purchase an excessive amount of the company’s inventory, which would later be used in medically unnecessary procedures. The bribes included meals, Apple electronics, and sporting event tickets.
According to the whistleblower, atherectomy procedures were performed at the Robert J. Dole VA Medical Center at rates he had never seen in his career. Atherectomy procedures are performed on patients with peripheral arterial disease, to remove the buildup in the arteries and restore blood flow. The atherectomy device can be used in tandem with balloons, to put pressure on the buildup to clear it, and stents, which can be inserted to keep the artery propped open. Often one to two devices are used in the procedures.
Medtronic is a major manufacturer of atherectomy devices. In text messages from 2017, a Medtronic sales representative was in the operating room while doctors treated a patient for peripheral artery disease. During the procedure, the representative was texting a Medtronic colleague with a real-time account of the devices that were inserted into the veteran’s body. As noted above, often one to two devices are used in these procedures; however, in this specific procedure, 17 devices were used. After the procedure concluded, the sales representative that was in the operating room texted the colleague that they were going to take the surgeons who performed the procedure to lunch.
A link to a CNBC interview with the whistleblower can be found here.
VA Investigation
An independent investigation prompted by the medical director of the Dole VA found that the VA Medical Center was purchasing an excessive amount of inventory. The data showed that the Dole VA was purchasing more devices than some of the largest veterans medical facilities, to the tune of “$5 million a year more than they should have been in this department alone,” according to the medical director.
After the investigation, the medical director shut down the unit that performed the atherectomy procedures in 2018 and referred the case to the VA’s Office of Inspector General (OIG). The VA notes that there were no immediate safety issues or substandard care identified. The VA OIG opened its own investigation in 2018, though it has yet to be completed.
It was through the VA investigation that many of the recently unsealed evidence and exhibits were revealed. When the medical director saw the pages of dinner receipts during his deposition, he noted that “there’s a tremendous amount of activity here,” with multiple orders of oysters, filet mignon, and lobster tail, “clearly giv[ing] the impression that influence is trying to be asserted.” It seems that these meals were provided not only to the doctors that performed the atherectomy procedures but also to hospital staff at the Dole VA.
Medtronic History
Medtronic is no stranger to settlements based on allegations of kickbacks and False Claims Act schemes. Just since 2018 alone, the company has paid nearly $50 million in settlements resolving similar allegations, though it never admitted to any wrongdoing in any of those settlements.
Doctors Named in the Lawsuit
The three doctors named in the lawsuit, Dr. Shaun Gonda, Dr. Bret Winblad, and Dr. Kermit Rust, were contractors (and not employees of the VA). A review of their Open Payment files from the year 2018 showed that Medtronic was the top company that made general payments in 2018, and that all payments made were for Food and Beverage. Interestingly, it doesn’t look like Medtronic reported to Open Payments anything that matches up with what is alleged in the lawsuit. For example, 2018 payments totaled less than $26 for Dr. Gonda (all Medtronic Vascular, Inc.), less than $527 for Dr. Winblad ($114.03 for Medtronic Vascular, Inc. and $16.14 for Medtronic USA), and $591 for Dr. Rust ($166.70 for Medtronic Vascular, Inc. and $128.65 for Medtronic USA).
While 2017 Open Payments numbers are higher for all three named doctors, their receipts from Medtronic is still relatively low, compared to the allegations included in the lawsuit.