Health Law Daily Payments to restaurant owned by neurosurgeon result in $9.2 million settlement
Friday, November 6, 2020

Payments to restaurant owned by neurosurgeon result in $9.2 million settlement

By Rebecca Mayo, J.D.

Medtronic will pay $9.2 million to settle allegations of improper payments made to a neurosurgeon through a restaurant owned by the neurosurgeon and his wife.

Failure to report the full value of payments made by a medical device manufacturer to a physician has resulted in allegations of violations of the False Claims Act (FCA) and Open Payments Program (OPP) and a $9.2 million settlement. Medtronic USA Inc. has agreed to pay $8.1 million to resolve allegations that it violated the FCA by paying kickbacks to induce a physician to use Medtronic products and $1.1 million to resolve allegations that it violated the OPP by failing to accurately report payments made to the physician (Settlement Agreement, October 29, 2020).

Scheme. A Sioux Falls, South Dakota neurosurgeon and his wife owned a local restaurant called the Carnaval Brazilian Grill. In an effort to increase sales of its SynchroMedi II intrathecal infusion pumps, Medtronic identified the neurosurgeon as a "targeted physician." The neurosurgeon asked Medtronic to pay for events at Carnaval after explaining that Carnaval’s business was slow and Medtronic agreed. Medtronic held over 130 events at Carnaval, paying over $87,000 to the neurosurgeon’s restaurant. The neurosurgeon was allowed to invite his social acquaintances, business partners, favored colleagues, and potential and existing referral sources. Invitees were allowed to bring spouses or significant others and were seated at a family-style table in an open area of the restaurant near the bar with member of the public seated nearby. Medtronic paid for lavish meals and alcohol, with dinners from multicourse tasting menus and wines paired to each course.

Kickbacks. Internal expense reports classified the events as providing educational content or business information. However, the events were social in nature with little or no discussion of Medtronic products. Based on this, the government alleges that Medtronic knowingly and willfully paid kickbacks to the neurosurgeon by making payments to the restaurant, at his request, to induce him to use Medtronic’s SynchroMed II intrathecal infusion pumps.

Open payments program. The OPP was established by the Patient Protection and Affordable Care Act and requires medical device manufacturers to disclose to CMS certain payments or other transfers of value to a physician. Medtronic was required to disclose through reporting on the OPP portal both indirect payments to the neurosurgeon that Medtronic made by paying Carnaval, an entity that Medtronic knew the neurosurgeon owned, and direct payments to a third party, Carnaval, that Medtronic made at the neurosurgeon’s request. The government alleges that Medtronic failed to report the full value of its payments or transfers of value to or at the direction of the neurosurgeon. Medtronic separately reported to CMS only the value of the food and drinks that each physician that attended the events personally consumed at Carnaval, rather than reporting the total amount paid to Carnaval for the event as a payment or transfer of value to the neurosurgeon.

MainStory: TopStory CMSNews AntikickbackNews EnforcementNews FCANews FraudNews MDeviceNews ProgramIntegrityNews

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