A Medical Device Daily

Medtronic (Minneapolis) reported that it has entered into an agreement to settle lawsuits relating to its Marquis line of implanted cardiac defibrillators (ICDs) that were the subject of a field action announced Feb. 11, 2005 (Medical Device Daily, Feb. 15, 2005).

Under terms of the settlement, Medtronic has agreed to settle 2,682 cases for $95.6 million, plus $18.5 million in attorneys’ fees. The parties will file joint requests to the court for termination of the Multi-District Litigation (MDL) proceedings related to the Marquis devices, as well as requests for dismissal of the cases. The settlement can be terminated by either party if the MDL proceedings are not terminated.

The cases in the settlement are those arising from the Marquis device field action, including cases currently filed either in the MDL or in state courts and claims that could have been filed. All settling plaintiffs must satisfy any insurance claims and subrogation interests of Medicare or Medicaid from their settlement payments. No additional sums for these cases will be paid by Medtronic for third-party claims or attorney fees.

The settlement is a compromise of disputed claims, and the parties have not admitted any liability or the validity of any defenses in the litigation.

Medtronic will reflect the Marquis device settlements as a one-time charge in its third fiscal quarter, ending in January 2008.

“We are pleased to settle these cases and put the matter behind us,” said Pat Mackin, senior VP and president of Medtronic Cardiac Rhythm Disease Management. “We prefer to focus our resources on areas that are beneficial to physicians and patients, rather than prolong this litigation. We know the Marquis line of defibrillators continues to provide life-saving therapy for thousands of people around the world, and they remain among the most reliable ICDs ever manufactured by Medtronic.”

In other legalities, Saint Joseph’s Hospital and Saint Joseph’s Health System (Atlanta) said that they have agreed to pay the U.S. $26 million to settle allegations that the medical facility violated the False Claims Act with regard to billing for inpatient admissions and other services. The settlement resolves an investigation primarily focusing on Saint Joseph’s Hospital’s submission of Medicare claims from the years 2000 through 2005, where services that should have been billed as “outpatient visits” were charged at the higher rate as “inpatient admissions.”

The settlement covers claims submitted by Saint Joseph’s Hospital for short inpatient admissions, usually of one day or less but sometimes longer, where the services were such that they should have been billed on an outpatient “observation” basis or as an emergency room visit.

It also covers claims where the hospital admitted patients for three days, without meeting the criteria for a covered admission, so the patients would qualify under Medicare payment rules for subsequent coverage for skilled nursing facility services. In addition, the settlement includes certain claims submitted by the hospital for inpatient admissions relating to placement of carotid artery stents, which were not covered under Medicare benefits.

The qui tam, or whistleblower lawsuit, was filed by Tami Ramsey, a former hospital employee. Ramsey, a registered nurse, will receive $4.94 million as her share of the recovery in the case.

“This significant settlement demonstrates our commitment to protect public funds from fraud and abuse,” said David Nahmias, U.S. Attorney for the Northern District of Georgia. “Every hospital that submits claims to the Medicare program must ensure that its services are billed appropriately. We will continue to vigorously pursue Medicare providers who disregard billing rules.”

“Healthcare providers in the Medicare program have an obligation to turn square corners when dealing with the government,” said Jeffrey Bucholtz, acting Assistant Attorney General for the Civil Division. “This means that hospitals must go the extra mile to ensure that any claims for payment they submit to Medicare reflect the correct level of service.”

The U.S. has agreed to dismiss the lawsuit as a result of the settlement. As a condition of continued participation in federal healthcare programs, the Office of Inspector General (OIG) of the Department of Health and Human Services has required Saint Joseph’s Hospital and Health System to enter into a corporate integrity agreement. The agreement subjects Saint Joseph’s to strict policies and procedures to ensure future compliance with applicable statutes and regulations that govern the use of federal healthcare funds.

“Any time a false claim is submitted for payment, the Medicare program suffers,” said U.S. Department of Health and Human Services Inspector General Daniel Levinson. “OIG will work closely with our law enforcement partners to identify and hold accountable providers who obtain crucial Medicare dollars through inappropriate billing.”