Although our blog posts are most directly centered on articles that relate to matters involving medical malpractice acts and hospital negligence, we occasionally provide readers with newsworthy stories addressing other important issues that surface in the medical industry.
Fraud certainly counts as one of those, and our attention was driven recently to a settlement executed in late May between the U.S. Department of Justice (DOJ) and St. Jude Medical Inc, the giant medical device manufacturer headquartered in Minnesota.
The civil settlement, touted by a DOJ spokesperson with a formal announcement that it "will return funds to VA to benefit our nation's veterans," demands a $3.65 million payout from St. Jude. The money is a penalty for what the DOJ has termed St. Jude's active deception in making warranty payments on replacement pacemakers and defibrillators bought by the Departments of Defense and Veterans Affairs.
DOJ investigators state that St. Jude actively marketed the products to government customers by lauding the sizable credits that would be forthcoming if any problems with the devices occurred within the warranty period. Conversely, though, and when a problem did occur, it defrauded the government by overstating the cost for the products.
In essence, it shortchanged American taxpayers by pocketing monies that were properly slated to be returned to the government as warranty credits.
"Like any other customer, the government is entitled to get what it paid for," said one federal prosecutor following the settlement announcement. He added that strong penalty exactions are appropriate in instances when a vendor "does not honor warranty claims."