Company spreadsheets show that after a conference, Medtronic went to great lengths to track the use of its devices by each doctor who attended. A spreadsheet for a June 2003 conference in California, lists over 200 doctors and includes an estimate of the dollar amount of the devices each doctor uses in surgery. One surgeon is described as "a 100 percent compliant M.S.D. customer" (Medtronic Sofamor Danek), and other doctors are marked as needing "special attention."
According to Ms Poteet, Medtronic zeroed in on surgeons while they were still in training, and the company paid for doctors to attend any of 200 professional meetings a year. If the doctors wanted to play golf or go snorkeling, she alleges, Medtronic paid for the outings. When doctors visited Memphis, she says, company employees would take them to the "Platinum Plus" strip club, and then write off the expense as an evening at the ballet.
In 2003, a company document reveals that Medtronic attorney, Todd Sheldon, questioned whether the company should be paying for all the excursions. "When we are sending scores of doctors to a nice resort like this under the guise of training and education on our products," Mr Sheldon wrote in an email, "I think we need to be more careful and stick to the limits of our rules as best we can."
She points out that while payments to some doctors were lowered in 2004, when the company first came under investigation, the payments went back up last year. For instance, Dr Hallett Mathews, of Virginia, was paid $300,000 in consulting fees in 2003, but only $75,000 in 2004. But then in 2005, he was paid nearly $700,000 in consulting fees in the first 9 months.
Had Medtronic not entered into a settlement agreement with the DOJ, the company could have been hit with a triple damages award if it lost in court, under a key provision of the FCA. As it is, the $40 million fine is the second financial penalty for Medtronic's spinal division in a year. In 2005 the company paid $1.35 billion to settle a patent infringement lawsuit and cover the costs of additional patents from Los Angeles surgeon and inventor, Dr Gary Michelson.
Over the past couple years, the financial relationships between device makers and doctors have caught the attention of several law enforcement agencies. In 2005, US attorneys in Boston and Newark issued subpoenas to Medtronic, along with just about every other major medical device maker, as part of a far reaching investigation into the financial entanglements between physicians and the industry as a whole.
Therefore, legal experts say Medtronic is probably not breathing much easier these days. Three of the subpoenas issued last fall went to the top cardiac-rhythm-management companies, Medtronic, Guidant and St Jude Medical, and seek information on their marketing practices related to pacemakers and defibrillators.
And Medtronic already had plenty of legal problems with its defibrillator division. In February 2005, the company told 87,000 patients that their defibrillators might fail.
However, company documents filed in the California lawsuit, Randall v Medtronic, No C-05-3707-JW, in the US District Court for the North District of California, show the company knew about the flaw back in 2003, and continued to sell the faulty devices for two more years.
"Medtronic has been taking products they know are not quite right and putting them into people rather than take the loss," according to Hunter Shkolnik, a New York attorney, who said in a February 13, 2006, interview with Bloomberg News, that he represents more than 200 people whose Medtronic devices were recalled.
"If you know there's a problem with a component," he said, "you don't put it out and sell it to people."
Since the recall, 19,000 people have had replacement surgery, Medtronic spokesman, Rob Clark, told Bloomberg News.
Critics say Medtronic refuses to acknowledge that undergoing replacement surgery is risky and constitutes an injury in itself. According to Bloomberg, based on Medtronic's estimate of a 2 to 5% post-implantation infection rate, 380 to 950 patients may have developed infections after replacement of their devices.
Spokesman Clark told Bloomberg that Medtronic does not keep track of deaths, disabilities or extra medical costs resulting from such complications.
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