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St. Jude Will Pay $3.65 Million in FCA Settlement

StethoscopeSt. Jude Medical, a Canadian medical device manufacturer, announced on Thursday that it would pay $3.65 million as an offer of settlement to dispose of allegations that it was overcharging buyers to replace the company’s pacemakers and defibrillators that were under warranty.

The allegations were initially brought by two whistleblowers in federal district court in Boston under the False Claims Act. The False Claims Act is a federal qui-tam law that permits private whistleblowers (also known as qui-tam relators) to sue contractors that have allegedly engaged in fraudulent practices in connection with payment for goods or services by the government. The Act also covers claims against individuals who engage in fraudulent practices in order to evade payment of liabilities owed to the federal government.  In the St. Jude case, the company was accused of submitting invoices to facilities run by the Department of Veterans Affairs and the Department of  Defense that overcharged for replacement pacemakers and defibrillators.

While the government has 60 days after relators file a claim under the Act to investigate the allegations and determine whether or not it will intervene in the litigation, private False Claims whistleblowers may move forward with their claims even if the government chooses not to intervene. Relators who prevail may receive between 15% and 30% of a final judgment or settlement. The government investigates cases that range widely in terms of the amount in controversy; the two St. Jude whistleblowers will receive $730,000 from the settlement for coming forward.