Whistleblower Lawsuit Alleges Bribery Scheme: Medtronic Denies Allegations of Kickback Scheme, Endangering Patients' Lives

Sales representatives from Medtronic plc MDT allegedly operated a bribery scheme at a Kansas veterans hospital.

The scheme involved bribing hospital staff to purchase Medtronic devices over competitors' and to buy excessive inventory.

The whistleblower lawsuit, filed by Tom Schroeder in 2017, alleges that veterans' lives were jeopardized and taxpayer money was wasted. The case became public at the end of 2022 when the government decided not to intervene.

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The lawsuit centers on how patients are treated for peripheral artery disease at the Robert J. Dole Veterans Affairs Medical Center in Wichita. 

Medtronic is the world's largest medical device manufacturer and has faced previous settlements related to kickback schemes and fraud claims.

Internal investigations at the hospital revealed excessive purchases and high costs, leading to the shutdown of the unit performing the procedures.

Evidence includes text messages from a Medtronic sales representative detailing the insertion of an unusually high number of devices into a patient.

In a statement to CNBC, Medtronic said the "allegations, in this case, are false, and Medtronic will continue to defend the litigation as it moves ahead."

The lawsuit raises questions about patient safety, with concerns about improper treatment and increased amputation rates.

Former Medtronic employees suggest that the alleged misconduct may have been inherited from acquired companies with less rigorous compliance systems.

The company defends Medtronic's compliance program and internal controls.

Price Action: MDT shares are up 0.15% at $87.70 premarket on the last check Thursday.