Whistleblower claims medical device company engaged in years-long bribery scheme with Veterans Administration hospital

A whistleblower lawsuit that was recently unsealed claims that sales reps from the world’s largest medical device manufacturer, Medtronic, engaged in a years-long bribery scheme with a Veterans Administration (VA) hospital.

As reported by CNBC, according to the unsealed lawsuit, sales representatives from Medtronic allegedly engaged in a bribery scheme at a Kansas veterans hospital for almost 10 years. The illicit scheme is claimed to have resulted in the squandering of millions of taxpayer dollars and posed a threat to the lives of patients.

The sales reps “bribed hospital staff to purchase its devices over those of competitors and to purchase grossly excessive inventory,” the lawsuit states, according to the news outlet.

Tom Schroeder filed the lawsuit, United States ex rel. Schroeder v. Medtronic, Inc., in 2017, which remained under seal until the end of 2022 when the government chose not to intervene in the case.

Prior to the lawsuit dominating his life, Schroeder dedicated his career to the medical device industry. He spent years working at Becton Dickinson, a direct competitor of Medtronic. During the alleged kickback scheme, Schroeder held the position of sales manager at Becton Dickinson. Over time, he advanced to become an area vice president, assuming responsibility for overseeing sales representatives in his region.

“We get into this industry to help people,” Schroeder said.

However, during his tenure at the small veterans’ hospital in Kansas, while he was working at one of his client sites, Schroeder discovered a scheme that had the complete opposite effect.

According to the whistleblower, rumors were circulating that Medtronic sales representatives were engaging in bribery, incentivizing VA staff to procure an excessive quantity of the company’s inventory. Allegedly, the products were then utilized in medically unnecessary procedures conducted on veteran patients. Schroeder asserted that the potential harm to patients was significant.

“I had a hard time sleeping at night,” Schroder said.

CNBC noted further:

Medtronic, headquartered in Dublin, Ireland, is the world’s largest medical device manufacturer in terms of revenue. Shares of the company were up more than 12% year to date as of Tuesday’s close. Medtronic’s latest annual filing also shows it had more than $31 billion in sales – with the largest portion of that coming from its cardiovascular portfolio.

The products at the center of Schroeder’s lawsuit fall under the cardiovascular umbrella. 

“There’s a lot of money tied up in this business,” Schroeder said.

The lawsuit primarily focuses on the treatment of patients with peripheral artery disease at the Robert J. Dole Veterans Affairs Medical Center in Wichita.

Peripheral artery disease arises when plaque accumulates in the arteries, leading to the obstruction of blood flow to the legs. An effective treatment for this condition involves the use of an atherectomy device, which is designed to eliminate plaque buildup and restore proper blood circulation. Balloons may also be utilized in conjunction with these devices to exert pressure on the plaque, facilitating its clearance. Additionally, stents can be inserted to maintain the artery in an open and unobstructed state.

Medtronic is a major manufacturer of the devices, the outlet reported.

Schroeder said that the frequency of atherectomy procedures conducted at the hospital was at a level he’d never seen during his career.

Text messages from the case, which have now been unsealed, reveal an incident that occurred in 2017. A Medtronic sales representative was present in an operating room while doctors were treating a veteran patient for peripheral artery disease. During the procedure, the employee sent a detailed text message account to a Medtronic colleague, providing a play-by-play description of the devices being inserted into the patient’s body.

According to the text messages, medical experts assert that the typical number of devices used in these procedures ranges from one to two.

“U are going to want to start going to the VA all the time,” the colleague texted in response after hearing how many of the devices were used.

“If you read those text messages, and you’re not pissed off, and you’re not angry, and you’re not sad for those veterans, I don’t know what to say,” Schroeder said. “That broke my heart.”

Sources include:

CNBC.com

BigPharmaNews.com