On 12-Dec-11, Medtronic, Inc. (NYSE: MDT) announced that it reached a settlement agreement with the United States Department of Justice (DOJ) regarding an industry-wide review of post-market clinical trials and device registries, which dates back to 2005. Although this settlement is a step forward for a company plagued with investigations, we caution investors to remain vigilant as many more settlements have yet to emerge.
Even when considering this latest settlement, we would like to point out that the company appears to remain tied up in an ongoing SEC investigation and at least 9 ongoing non-SEC investigations. This multitude of ongoing regulatory matters depicts MDT not as a company that's just made a few mistakes, but rather (to our view) it comes across as possessing a culture that allows for careless internal oversight coupled with a blatant disregard for authorities (if not shareholders).
The details of each ongoing investigation are noted below.
In Sep-07 and Nov-07, MDT received letters from the SEC and DOJ, respectively, requesting information related to any potential violations of the U.S. Foreign Corrupt Practices Act in connection with the sale of medical devices in several non-U.S. countries, including Greece, Poland, Germany, Turkey, Italy, and Malaysia.
In Oct-08, it received a subpoena from the U.S. Attorney’s Office for the District of Massachusetts pursuant to Health Insurance Portability & Accountability Act (HIPAA) requesting documents related to its INFUSE Bone Graft product. MDT has since received supplemental subpoenas or document requests in connection with the INFUSE Bone Graft product, including a Dec-08 civil investigative demand (CID) from the Massachusetts Attorney General’s Office, an Oct-11 subpoena issued by the California Attorney General’s office, and several inquiries from the United States Senate Finance Committee.
In Apr-09, it received an administrative health care subpoena from the U.S. Attorney’s Office for the Northern District of Indiana requesting documents related to its relationship with customers, as well as documents relating to certain employees. This matter last appeared in its FY11 10-K filed 28-Jun-11.
In Jun-09, it received an administrative subpoena from the New Jersey Attorney General requesting documents related to its clinical studies, financial arrangements with certain physicians and health care providers, and clinical research done by certain physicians and health care providers.
In Sep-09, it received a subpoena from the Office of Inspector General, Department of Health and Human Services requesting documents related to its cardiac rhythm medical devices, including revenue, sales, marketing, and promotional documents. The subpoena also requested documents related to reimbursement communications to customers pertaining to the devices, scientific studies and registries pertaining to the devices, and payments or items of value provided to customers.
In Mar-10, it received a CID from the DOJ pursuant to the federal False Claims Act seeking information regarding the company’s knowledge about claims to Medicare for the implantation of implantable cardioverter defibrillators (ICDs), including reimbursement advice given by the company, payments to persons or entities involved in decisions about implantation of ICDs, and the national coverage determination relating to ICDs.
In Oct-10, it received a subpoena issued by the U.S. Attorney’s Office for the Western District of New York, pursuant to HIPAA, related to the company’s sales, marketing, and reimbursement support practices regarding certain neuro-stimulation devices.
In Nov-10, the French Competition Authority commenced an investigation of the company, along with a number of other medical device companies and the companies’ trade association, Syndicat National de l’Industrie des Technologies Medicales (SNITEM), to determine whether such companies or SNITEM engaged in any anti-competitive practices in responding to tenders to purchase certain medical devices.
Most recently in Aug-11, it received a letter from the DOJ requesting information related to the its practices regarding the replacement of insulin pumps for Medicare beneficiaries.
Here is a link announcing the Settlement.