Medtronic FCA Claims Survive Reconsideration Despite First Circuit’s But-For Causation Standard

Medtronic FCA Claims Survive Reconsideration Despite First Circuit’s But-For Causation Standard

A Massachusetts federal court denied Medtronic’s renewed bid for summary judgment against Anti-Kickback Statute (AKS)–based False Claims Act (FCA) claims. Applying the First Circuit’s recent decision in United States v. Regeneron Pharmaceuticals adopting a but-for causation standard for such claims, the court found the relator proffered sufficient evidence to create a genuine dispute of material fact that Medtronic’s extensive, sustained involvement in physicians’ iPro continuous glucose monitoring clinics — staffing offices, placing devices, training patients, and coordinating patient scheduling — constituted remuneration and causally drove claims for Medtronic products. The court also considered Centers for Medicare & Medicaid Services (CMS) claims data analyses that matched the presence of Medtronic personnel with upticks in specific provider claims, as well as temporal links to identified patients who attended the clinics. The court reiterated that there was sufficient evidence for a jury to find Medtronic acted knowingly and willfully by embedding sales personnel to “add value” to practices to induce the use of Medtronic insulin pumps over competitors.

The decision underscores that even under a stricter causation framework, detailed evidence of integrated vendor activities and matched claims data can sustain FCA kickback theories at summary judgment.

The case is United States ex rel. Witkin et al. v. Medtronic Inc., No. 1:11-cv-10790 (D. Mass.).

Jury Convicts Brokerage President and Marketing CEO in $233 Million ACA Enrollment Fraud Scheme

A federal jury in West Palm Beach, Florida, convicted Cory Lloyd and Steven Strong for orchestrating a years-long scheme that falsely enrolled vulnerable individuals in fully subsidized Affordable Care Act (ACA) plans to generate millions in commissions. Evidence showed the defendants targeted low-income and homeless individuals — including those with mental health and substance-use disorders — using “street marketers” to coach applicants to misstate income, supply mismatched identifiers, and manipulate Medicaid denials to enroll consumers outside open enrollment. The government proved at least $180 million in federal subsidy payments and highlighted resulting disruptions to victims’ existing medical coverage. Lloyd and Strong were convicted of conspiracy to commit wire fraud, wire fraud, and conspiracy to defraud the United States. Strong was also convicted of money laundering. Each faces substantial statutory maximum penalties, with sentencing set for February 4, 2026.

The case is United States v. Lloyd, No. 9:25-cr-80015-DMM (S.D. Fla.).

The US Department of Justice’s (DOJ) press release is available here.

Aesculap to Pay $38.5 Million Over Alleged Knee Implant Failures and Unapproved Devices, Enters Non-Prosecution Agreement

Medical device company Aesculap Implant Systems LLC agreed to pay $38.5 million to resolve FCA allegations that it sold its VEGA System knee replacement devices knowing they failed at a higher-than-acceptable rate, leading to unnecessary revision surgeries and false claims to Medicare and Medicaid. The government alleged Aesculap concealed cement adhesion problems, failed to track and report adverse events, and continued marketing despite early evidence of premature loosening. The settlement further resolves allegations that Aesculap paid unlawful remuneration, including consulting payments and travel, to a Georgia orthopedic surgeon to induce the use of the VEGA system in violation of the AKS. Separately, Aesculap entered a non-prosecution agreement concerning two devices: the ELAN-4 Air Drill and JS Series SterilContainer S2. The devices were distributed without the required US Food and Drug Administration clearance after an employee forged clearance documents. That employee previously pled guilty to Federal Food, Drug, and Cosmetic Act violations.

The relators, former distributors, will receive approximately $4.48 million from the recovery. Aesculap ceased US sales of all knee devices in April 2024.

The cases are United States ex rel. Marien & McGee v. Aesculap Inc. et al., No. 5:19-cv-01618 (E.D. Pa.), and United States ex rel. Stafford v. B. Braun Med. Inc., No. 4:19-cv-00217 (E.D. Pa.).

The DOJ’s press release is available here.

Except for the facts that Aesculap admitted as part of the non-prosecution agreement, the claims resolved by the settlement are allegations only, and there has been no determination of liability.

CVS to Pay $18.2 Million to Resolve Medi-Cal False Claims Allegations Over “Code 1” Prescriptions

CVS Pharmacy Inc. agreed to pay $18.2 million to the federal government and California to resolve allegations that it submitted reimbursement claims to Medi-Cal for certain restricted “Code 1” drugs without verifying or documenting required diagnoses and eligibility conditions. The settlement, stemming from a whistleblower suit filed by a California pharmacist, alleged CVS dispensed drugs for unapproved uses and then billed Medi-Cal with false certifications that Code 1 criteria were met. Authorities emphasized the importance of program integrity and proper documentation to ensure beneficiary safety and fiscal stewardship. Of the settlement, the federal share is $8.1 million (including $4.7 million restitution) and California’s share is $10.1 million (including nearly $6 million restitution). The relator will receive approximately $3.3 million from the recovery. CVS denied liability, stating it resolved the matter to avoid further litigation and noting that Medi-Cal Rx has since assumed responsibility for certain coverage determinations.

The settlement agreement is available here, and the DOJ’s press release can be read here.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Zephyr Aviation to Pay $3.9 Million to Resolve Alleged Overbilling on DHS Air Transport Contracts

Zephyr Aviation LLC and its owners, Frederick Credno Jr. and Frederick W. Credno III, agreed to pay $3,901,000 to resolve allegations that they violated the FCA by submitting inflated invoices for US Department of Homeland Security (DHS) contracts tied to US Customs and Border Protection (CBP) air transport operations. The United States alleged that, in connection with contracts under which Zephyr chartered flights to transport persons in CBP custody between 2022 and 2025, Zephyr routinely billed for flight hours that exceeded the actual flight times reported by its subcontracted aircraft operators.

The settlement agreement can be read here, and the DOJ’s press release can be read here.

The claims resolved by the settlement are allegations only and there has been no determination of liability.

Nonprofit Agrees to Pay $3.5 Million to Settle FCA Allegations Over Ineligible PPP Loan

Southside Communities Fire Protection, Inc., a nonprofit providing emergency services in Chatham County, Georgia, agreed to pay $3,499,619 to resolve allegations that it improperly obtained a $3.1 million Paycheck Protection Program (PPP) loan despite being ineligible as a Section 501(c)(4) entity. The settlement follows a qui tam complaint filed by GNGH2, Inc., and a coordinated investigation by the US Attorney’s Offices for the Middle District of Florida and the Southern District of Georgia, with assistance from the Small Business Administration’s Office of General Counsel.

The DOJ’s press release can be read here.

The claims resolved by the settlement are allegations only and there has been no determination of liability.