News Feature | May 8, 2014

St. Jude Facing Justice Department Probe Regarding Kickbacks

By Jof Enriquez,
Follow me on Twitter @jofenriq

St. Jude Medical this week disclosed that it is cooperating with the U.S. Department of Justice (DOJ) in its investigation of alleged payments made to doctors who implanted the company’s cardiac pacemakers and defibrillators.

In an SEC filing on Tuesday, the company said it received a civil investigative demand (CID) letter from the DOJ in April 2014 for possible violations of the False Claims Act. The DOJ is looking into allegations that “certain health care facilities and a physician group may have submitted false claims to federal health care programs as a result of alleged inducements paid by the company to implant the company’s cardiac devices.”

The device maker did not reveal any additional details regarding the inquiry. It did confirm in its quarterly filing that it is currently the subject of three open governmental investigations.

In addition to the April CID letter, St. Jude received a CID from the DOJ in March 2010 regarding communications it made for its tachycardia implantable cardioverter defibrillator systems (ICDs). The company was also subpoenaed by the Office of Inspector General for the Department of Health and Human Services (OIG) in September 2012 regarding alleged payments it made to care providers in three states.

Minnesota-based St. Jude said it already provided responses to authorities and is working with them to resolve all three investigations.

The company has a history of settling similar probes. In 2011, it agreed to pay $16 million to settle a DOJ investigation of alleged kickbacks to market St. Jude products. In 2010, it paid $3.7 million in a case involving illegal payments to hospital customers in Ohio and Kentucky.

St. Jude is also facing scrutiny from the FDA over quality control of its products. The company’s Sylmar, Calif. facility, which manufactures cardiac rhythm devices, was subjected to a series of inspections by regulators in 2012, 2013, and 2014. Its Plano, Texas facility, which makes neuromodulation devices, was also inspected in 2009. The facilities continue to operate pending warning letter closure by the FDA.

Regulators continue to keep a close eye on the $65.6 billion cardiac device industry, following major recalls of faulty defibrillator leads in 2007 and 2011 involving St. Jude and Medtronic respectively.