Medtronic, Again Questioned Over Payments to Doctors, Is Subject of Senator’s Inquiry


Published: September 27, 2007


An influential senator is raising new questions about payments made to spine surgeons by Medtronic, one of the nation’s largest makers of medical devices.


Carol T. Powers/Bloomberg News

Charles Grassley, a member of the Senate panel that oversees Medicare, has asked Medtronic to explain any payments.


Medtronic, which reached a $40 million settlement last year with the federal government over accusations that the company had paid illegal kickbacks to doctors for using its spinal devices, has continued to pay doctors millions of dollars in consulting fees, according to a lawyer representing a whistle-blower involved in the case.


Senator Charles E. Grassley, Republican of Iowa, has written to Medtronic, asking the company to explain, among other things, any payments made since the period covered by the settlement. The letter is part of a broad inquiry by Mr. Grassley into the financial ties that often exist between doctors and the companies that make medical devices and drugs.

Medtronic defended the continuing payments as legitimate compensation for work the doctors have done. Medtronic said it welcomed the opportunity to speak with Mr. Grassley and his staff.


The company also said the payments had been made in the normal course of working with doctors on the best use and design of new medical devices. “Innovation in medical devices does, in fact, depend on the input of the physician,” a Medtronic spokesman, Robert Clark, said.


In the case that led to last year’s settlement, the Justice Department accused Medtronic of paying kickbacks through what government officials described as “sham consulting agreements, sham royalty agreements and lavish trips to desirable locations” offered to doctors from 1998 to 2003.


In the settlement, Medtronic denied any wrongdoing.


Mr. Grassley, the senior Republican on the Senate Finance Committee, which oversees the federal Medicare program, sent a letter to Medtronic’s chief executive last week, asking the company to explain its payments to the surgeons after 2003. He also asked the company to explain its financing of organizations involved in providing continuing medical education to these doctors.


“Transparency builds trust, and full disclosure about the dollars that device makers give to doctors would let patients know if they should be more or less concerned about a doctor’s allegiance to a particular product line,” Mr. Grassley said yesterday.

Medtronic’s payments to surgeons appear to have continued for at least several months after the settlement was reached in July 2006.


Through much of 2006, the company’s payments included nearly $6 million in consulting fees to dozens of doctors, according to the whistle-blower’s lawyer, Andrew R. Carr Jr. of the firm Bateman Gibson in Memphis, who obtained a list of payments from a former Medtronic employee.


Mr. Carr filed a lawsuit in 2003 on behalf of Jacqueline Kay Poteet, who managed travel services for Medtronic’s spinal device business. In early 2006, Mr. Carr filed an additional lawsuit on Ms. Poteet’s behalf, a supplemental complaint that accused the company of continuing to use these improper payments in 2004 and 2005.

“The 2006 documents clearly appear to confirm the allegations of my supplemental complaint,” Mr. Carr said. He said he had alerted members of Congress to what he sees as an inadequate investigation of his client’s claims by the Justice Department. “The enormous sham consulting payments continue unabated to this date,” Mr. Carr said. “Nothing has changed.”


The Justice Department declined to comment on Mr. Carr’s accusations.

In recent months, Mr. Grassley has raised many questions about the large sums of money paid to doctors by drug and medical device companies. In August, he introduced legislation that would require payments for consulting, lectures, attendance at seminars and the like to be made public through a federal registry, allowing colleagues and patients to see a doctor’s financial ties with particular manufacturers.


In the case of Medtronic, several doctors received six-figure fees from the company in 2006, according to the list of payments.


One, Dr. Hallett H. Mathews, a prominent spine surgeon in Virginia, received nearly $300,000 in the first 10 months of 2006. Dr. Mathews had received payments of nearly $700,000 for the first nine months of 2005, according to previous documents supplied by the whistle-blower.


In January, Dr. Mathews joined Medtronic as vice president for medical affairs for the company’s spinal unit. As a doctor in private practice, he had defended his consulting fees as compensation for time spent away from his family and his practice. The company said yesterday that he would have no additional comment.


Other doctors receiving generous consulting payments through the first 10 months of 2006 include Dr. David Polly Jr., a spine surgeon at the University of Minnesota, who received consulting fees of nearly $262,000, and Dr. J. Kenneth Burkus, a surgeon in Columbus, Ga., who received fees of more than $250,000.


“All of this is based on time,” said Dr. Polly, who estimated that he spent two or three weekends a month consulting or working with other doctors for Medtronic. The rate he gets from the company is less than he would make testifying or working on medically related legal issues, he said.


Dr. Polly said he tended to favor Medtronic’s products, but he said that was because he believed they were the best for his patients.


He also said that Medtronic’s money had not in any way influenced his medical decisions, whether in choosing when to operate on a patient or in deciding what brand of device to use. The University of Minnesota closely monitors any potential conflicts of interest in his research activities, Dr. Polly said, and was aware of his consulting arrangement with Medtronic.


A university official confirmed that but said the university does not require the disclosure of exact dollar amounts.


Dr. Burkus did not return repeated telephone calls to his office yesterday seeking comment.


Questions about Medtronic’s payments to spine surgeons emerged in two whistle-blower lawsuits that were filed in federal district court in Memphis over the actions of the company’s spinal-implant division, Medtronic Sofamor Danek.


The settlement reached last July covered the first lawsuit, which was filed in 2002, and was contingent upon the dismissal of both suits. Justice Department officials then sought to dismiss the second case, brought by Ms. Poteet, including her supplemental complaint. It was dismissed and is now under appeal.


Mr. Clark, the Medtronic spokesman, said Ms. Poteet, who stands to benefit financially if her whistle-blower suit is successful because she would win a share of any settlement, and her lawyer have attempted to reach a settlement.


The company has refused those overtures, Mr. Clark said. “We do not attempt to settle claims of this baseless nature,” he said.


Although Ms. Poteet’s lawyer, Mr. Carr, acknowledged the financial interest of any whistle-blower, he said that his overtures to Congress were distinct from the lawsuit. “The issue is whether this behavior continues,” he said.