Medtronic, the Minnesota-based health care product manufacturer, plans to buy Mansfield's Covidien and move its base overseas to save on federal taxes. But that's not the only controversy facing the corporate giant.
Since 2006, the company that manufactures a wide array of pacemakers, defibrillators and other medical products has paid tens of millions of dollars in settlements on charges it violated federal law by paying illegal kickbacks to doctors to promote its products.
While the company admitted no wrongdoing and maintains a strict ethics code, a series of cases alleging improper payments by Medtronic and other medical firms raises serious questions about the industry's marketing tactics.
Critics say incentives and financial relationships between physicians and manufacturers could also undermine patients' confidence that a doctor's prescription is always in their best interest.
Well-known drug and medical device companies have signed agreements to settle fraud and kickback charges in the last eight years. Payments to the federal government and individual states have reached into the billions of dollars.
But, Medtronic has gained notariety on several occasions because of allegations it paid kickbacks or provided sham consulting and royalty agreements, travel and other benefits to physicians in violation of federal anti-kickback and false claims laws.
In some cases, the government alleged, those activities led to false claims being submitted to Medicare and Medicaid.
Earlier this year, Medtronic agreed to pay $9.9 million to settle federal claims that it used various forms of payments to persuade physicians to implant pacemakers and defibrillators it manufactures.
The Justice Department alleged Medtronic caused false claims to be submitted to Medicare and Medicaid by using illegal kickbacks to influence doctors to use its products.
According to the government, those kickbacks included paying physicians to speak at events to promote its business, developing marketing plans for doctors at no cost and providing tickets to sporting events.
The settlement stemmed from a whistleblower lawsuit filed by former Medtronic employee Adolfo Schroeder, who sued under a federal law that allows whistleblowers to share in any settlement.
"Improper financial incentives have the potential to compromise physician medical judgment," Assistant Attorney General Stuart F. Delery of the Justice Department's Civil Division said in a news release. "This case demonstrates the Department of Justice's commitment to pursue medical device manufacturers that use improper financial relationships to influence physician decision-making."
Medtronic said in a statement it made no admission that any of its actions were improper or unlawful.
"Medtronic is committed to appropriate interactions with physicians and has industry-leading Business Conduct Standards that must be followed by all employees," the statement said.
The company's Global Business Standards Policy listed on its website specifically bars payments to prospective users "as an unlawful inducement to purchase, lease, recommend, use, arrange for the purchase or lease of, or prescribe a Medtronic product."
This year's settlement isn't the first time Medtronic has paid to settle federal allegations.
In 2006, the company reached a $40 million settlement with the Justice Department over claims its Sofamore Danek Division paid kickbacks to doctors to induce them to use its spinal products.
In 2011, it paid $23.5 million to end federal charges the company used payments related to post-market studies and device registries to funnel kickbacks to doctors to induce them to implant its pacemakers and defibrillators.
While kickback allegations raise ethical questions, some experts say such payments constitute only a fraction of mostly legitimate efforts by companies to promote use of their products.
"Kickbacks aside, there's much more of a legal nature that's used by drug and medical device companies seeking to influence doctors," said Michael Carome with the watchdog group ProPublica.
However, he said penalties for kickbacks are probably too low to deter all such questionable payments when profits from drug and device sales can run into the billions.
The suspicion that a doctor's judgment might be tainted by lucrative arrangements with a drug company might be expected to generate outrage among a public dependent on physicians' medical advice - if more patients paid attention.
But, consumers are rarely familiar with details of kickback claims, or they don't connect them with their personal medical care, said Ross Brooks, chairman of the whistleblower practice at the lawfirm Sanford Heisler.
Sanford Heisler has handled various whistleblower lawsuits against health care companies, including Medtronic.
With few consequences other than financial penalties for getting caught, some critics argue there's little to dissuade some medical manufacturers from fudging the line between legitimate and fraudulent sales tactics.
"In a cynical view, the costs of big government settlements and recovery against a company could be looked at as a cost of doing business," Brooks said.
Even a multi-million-dollar settlement against a medical products company constitutes a drop in the bucket next to the potential for profit from pharmaceuticals or complex medical devices like implantable pacemakers and defibrillators, he said.
Company officials responsible for kickbacks, meanwhile, face relatively few deterrents.
While criminal charges are often filed against suspect companies, most are resolved through voluntary settlements in which firms agree to pay or submit to compliance monitoring.
"Rarely does an executive from one of these companies face criminal prosecution personally, or is a medical supplier barred from doing business with the federal government," Brooks said.
Doctors who accept questionable payments face even less risk.
According to a study by ProPublica, 15 drug and medical device companies paid a total of $6.5 billion from 2008 to 2011 to settle charges of marketing fraud or kickbacks. But, none of the more than 75 physicians named as participants were sanctioned in any way.
Brooks said the promotion of medical products through suspect consulting contracts and other methods is far from a victimless crime.
Besides raising questions of trust between doctor and patient, he said, the system also has the potential to corrupt physicians or result in the wrong drug or medical device being prescribed to a patient.
Possibly one of the most shocking allegations of misconduct was leveled not against a medical products company directly, but against a former military doctor and paid Medtronic consultant who was accused by the Army of falsifying research.
The research purported to show high success rates in patients using bone growth products sold by Medtronic.
The 2009 charges were made all the more troubling because the doctor's controversial findings, later retracted by a medical journal, were based on research involving wounded soldiers at Walter Reed Army Hospital.
The paper, written by former Army surgeon Dr. Timothy R. Kuklo, involved the use of Medtronic Infuse bone growth material in treating leg fractures in wounded military personnel.
But, an Army investigation concluded that success rates reported in the paper were higher than could be documented and that the names of four other researchers who Kuklo listed as co-authors were used without permission.
Medtronic suspended its relationship with Kuklo following the allegations, according to a published report.
A subsequent review by Washington University, from which Kuklo resigned after the Walter Reed revelations, did not find specifically that Kuklo falsified data. According to data disclosed to The New York Times, Medtronic paid nearly $800,000 to Kuklo for attendance at medical conferences and other purposes between 2001 and 2009. Medtronic has denied it was involved in any way with the retracted report.
Medtronic did not respond to a Sun Chronicle reporter's questions about the Kuklo affair.
The 2009 case did not put to rest concerns over Medtronic's Infuse brand products.
This past June, health insurer Humana sued Medtronic under the federal anti-racketeering law for allegedly conspiring with prominent physicians to promote the use of Infuse in neck and spine surgeries that were not approved by the U.S. Food and Drug Administration.
The Humana suit alleges the company paid $210 million to doctors who advocated the product's use, partly through articles in medical journals.
Medtronic denied making improper payments, in an email to The Wall Street Journal.