(Reuters) - Medtronic Inc said it agreed to pay $85 million to settle a shareholder lawsuit accusing it of making misleading statements concerning Infuse, a genetically engineered bone graft used in spinal surgery.
The settlement resolves claims that Medtronic failed to reveal that as much as 85.2 percent of Infuse sales depended on so-called “off-label” uses, where doctors sometimes paid by Medtronic would prescribe the product for applications not approved by the U.S. Food and Drug Administration.
Shareholders said Infuse sales and Medtronic’s share price fell after the company revealed that the U.S. Department of Justice was probing off-label marketing and the U.S. Senate began its own inquiry.
Infuse sales totaled about $800 million in Medtronic’s 2011 fiscal year, but the Minneapolis-based company last August said sales were declining by a high-teens percentage amid the federal inquiries. Net sales for the entire company totaled $15.9 billion in fiscal 2011.
Medtronic expects to take a charge for the settlement in its fiscal fourth quarter ending on April 27.
It also said that under the settlement, it explicitly denied making any misrepresentations or omissions, or that it otherwise engaged in any wrongdoing.
Settlement papers were not immediately available. Salvatore Graziano, a lawyer for the shareholders, declined to comment.
According to an amended complaint, the case covered investors who owned Medtronic shares between November 20, 2006 and November 17, 2008.
Lead plaintiffs in the case are the Teachers’ Retirement System of Oklahoma; the Oklahoma Firefighters Pension Fund, Germany’s Union Asset Management Holding AG, and Denmark’s Danske Invest Management A/S, court papers show.
Medtronic shares closed Friday down 2 cents at $39.19. The company announced the settlement after U.S. markets closed.
The case is Minneapolis Firefighters’ Relief Association et al v. Medtronic Inc et al, U.S. District Court, District of Minnesota, No. 08-06324.
Reporting By Jonathan Stempel in New York; Editing by Richard Chang, Gary Hill