UPDATE 1-Medtronic settles U.S. kickbacks case over pacemakers

Wed May 28, 2014 4:29pm EDT

(Adds Medtronic statement)

May 28 (Reuters) - Medtronic Inc has agreed to pay the United States $9.9 million to settle claims that the company used kickbacks to induce doctors to implant its pacemakers and defibrillators in patients, the U.S. Department of Justice said.

The government had accused Medtronic of inducing doctors to use its products by paying them to speak at conferences, developing marketing and business plans at no cost, and providing tickets to sports events.

"These sorts of improper financial incentives not only undermine the integrity of medical decisions, they also waste taxpayer funds and are unfair to competitors who are trying to play by the rules," U.S. Attorney Benjamin Wagner in Sacramento, California, said in a statement on Wednesday.

Medtronic, in a separate statement, said the accord resolves claims over its marketing practices from 2001 to 2009, and involves no admission of wrongdoing. The company also said it has in recent years adopted new policies governing its business relationships with doctors.

The whistleblower case resolved claims under the federal False Claims Act against Minneapolis-based Medtronic, one of the world's largest heart device makers.

It was originally brought by Adolfo Schroeder, who said he was a business development manager who joined Medtronic in May 2006. Schroeder will receive about $1.73 million in the settlement, the government said.

Medtronic reported net profit of about $3.07 billion for its fiscal year ended April 25. The company said it set aside money for the settlement in its fiscal fourth quarter.

The case is U.S. ex rel Schroeder v. Medtronic Inc, U.S. District Court, Eastern District of California, No. 09-00279. (Reporting by Jonathan Stempel in New York; editing by Tom Brown and Matthew Lewis)

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