Medtronic Pays $9.21 Million Tip (Settlement) For Meals at Surgeon’s Restaurant

November 16, 2020

Over a nine-year period, Medtronic USA Inc., the mega-sized Minnesota-based medical device manufacturer, paid for over 100 events held at a Sioux Falls, South Dakota restaurant.

They must’ve loved the food and, of course, the service, because they’ve just left a $9.21 million tip. Well, not an actual tip, but a payment to settle alleged violations of the federal Anti-Kickback Statute and of the federal Open Payments Program.

According to the U.S. Government’s allegations, Medtronic agreed to the requests of South Dakota neurosurgeon, Wilson Asfora, M.D., to pay for over 100 social events, including scores of expensive meals, at Carnaval Brazilian Grill, a restaurant Medtronic knew Dr. Asfora owned. The Government claims the sponsored events were social gatherings for which Dr. Asfora selected and invited his social acquaintances, business partners, favored colleagues, and potential and existing referral sources, with Medtronic picking up the tab.

Why? Well, the story as told by the Government is a familiar one: They allege that the events were payments to benefit Dr. Asfora and induce him to use Medtronic’s SynchroMed II intrathecal infusion pumps.

As you know, the federal Anti-Kickback Statute prohibits directly or indirectly offering or paying anything of value to induce the referral of items or services covered by Medicare, Medicaid, TRICARE, and other federal healthcare programs.

CMS’ Open Payments Program requires that device manufacturers such as Medtronic report their financial relationships with healthcare providers.

On October 29, 2020, the DOJ announced that Medtronic agreed to pay $8.1 million to resolve the AKS allegations related to paying kickbacks to Dr. Asfora, and that the company also agreed to pay an additional $1.11 million to resolve allegations that it violated the Open Payments Program by failing to accurately report payments it made to the neurosurgeon.

As is always the case in connection with settlements of this sort, the claims resolved are allegations only, and there has been no determination of liability.

Over the years, I’ve seen “disguised” AKS violations in all shapes and sizes, from demands for free services and free personnel to the payment of “rent” for storage cabinets to payments for speeches that lasted a few moments, if that. Are others so “disguised” that they haven’t been discovered? I’m sure that’s the case. But when they are discovered, there’s hell to pay: violation of the AKS is a crime. People are in jail, right now, for violating it. And, violation of the AKS serves as the grounds for civil action under the False Claims Act, including those cases brought by whistleblowers, to recoup not only the amount of the related, tainted claims for federal health care program reimbursement but also treble damages plus five-figure per claim penalties.

Medtronic may have pushed away from the table, but the meal’s not over for Dr. Asfora. He and two of his other companies are defendants in a separate False Claims Act lawsuit in which the U.S. Government filed a complaint in November 2019, alleging that Dr. Asfora received kickbacks to use certain implants in his spinal surgeries.

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