Heart Device Manufacturer And Hospitals To Pay Nearly $4 Million to Resolve Fraud Allegations

St. Jude Medical Inc. (a heart device manufacturer), Parma Community General Hospital, and Norton Healthcare have paid the federal government $3,898,300 to resolve false claim allegations that St. Jude paid illegal kickbacks to two hospitals to secure heart device business. The federal government alleges that 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.
 
This action was initiated by the filing of an action under the False Claims Act by Jerry Hudson. Under the whistleblower provisions of the Act, Hudson’s share of the settlement announced today will be $640,050.