NASHVILLE (AP) - The U.S. Justice Department said Monday that a medical device manufacturer has agreed to pay $9.25 million in a false claims settlement.
Guidant LLC, a subsidiary of Boston Scientific Corp. in Natick, Mass., allegedly promoted the longevity and reliability of its pacemakers and defibrillators to physicians in an effort to persuade them to purchase Guidant products over competing devices.
The company allegedly touted the generous credits available should a device need to be replaced while covered under warranty.
However, officials said Guidant was aware that it failed to grant an appropriate credit to the purchaser of the device in a large number of cases where a product failed while still under warranty.
As a result, officials contend Guidant submitted invoices to Department of Veterans Affairs hospitals and Department of Defense facilities that overstated the cost for a replacement pacemaker or defibrillator.
Additionally, the alleged submission of such invoices to private hospitals caused them to overstate the cost of the devices on hospital cost reports, resulting in Medicare paying more for pacemakers and defibrillators than it otherwise should have.
The civil settlement resolves allegations contained in a whistleblower lawsuit filed in federal court in the Middle District of Tennessee.
As part of Monday's resolution, the whistleblower - Robert A. Fry - will receive payments totaling more than $2.3 million from the settlement.
"Protecting the taxpayers' interest by vigorously enforcing the False Claims Act is a top priority for this office," said Jerry E. Martin, U.S. Attorney for the Middle District of Tennessee. "Corporations and individuals who bill Medicare and Medicaid should know that the U.S. Attorneys' Office for the Middle District of Tennessee now has one of the largest units in the country devoted to litigating false claims cases, and we will a ggressively pursue fraud and abuse."
A spokeswoman for Boston Scientific Corp. didn't immediately return a call to The Associated Press seeking comment.