Covidien: ClosureFAST Training Payments With Nobody to Train

The Covidien practice development settlement required Covidien LP to pay $17,477,947 to the United States over allegations that free or discounted marketing and referral services induced purchases of its ClosureFAST vein-ablation catheters. The alleged bargain was to help physicians build their vein practices while winning their device business. Two former Covidien sales managers and a former employee of a customer brought the whistleblower cases, with allegations reaching into advertising requests, screening events and payments for training that never happened.

The Department of Justice announced the settlement on March 11, 2019. Its allegations covered support for providers in California and Florida from January 1, 2011, through September 30, 2014. ClosureFAST radiofrequency ablation catheters are used in procedures treating venous reflux disease, which is often marked by varicose veins. The government connected the alleged sales inducements to claims billed to Medicare and the two states’ Medicaid programs.

What Covidien’s Practice Development Program Allegedly Bought

Covidien’s practice development program allegedly supplied the work of building a vein practice: customized marketing plans, meetings with referring physicians and help bringing prospective patients to screenings. That support could bring business to the physician who chose the device.

The government described marketing plans tailored to specific vein practices. Covidien allegedly scheduled and conducted lunch-and-learn meetings and dinners with other physicians to drive referrals to those practices. It also allegedly provided substantial help planning, promoting and conducting vein-screening events to cultivate new patients.

The referral lunches’ alleged value lay in introducing a practice to physicians who could send it patients. The screening support worked at another point in the same chain, helping the practice reach potential patients directly. Covidien allegedly supplied both kinds of help to induce purchases of ClosureFAST.

The Justice Department alleged violations of the Anti-Kickback Statute and the False Claims Act. Free work for a practice, given to win federally funded business, can be a kickback. The department warned that such inducements can encourage excessive or unnecessary treatment and raise health care costs. Patients and taxpayers bear the consequences when the financial incentive drives the decision.

The Sales Evidence Behind the Settlement

The sales managers’ complaint described manufacturer-paid personnel providing free advertising, practice-specific marketing and screening, alongside sham training payments. These were the whistleblowers’ allegations about how the program operated in the field.

The most revealing exchange began with advertising for a vein screening. The complaint alleged that a physician made continued use of Covidien devices part of the discussion about who would pay:

That allegation supplies the commercial link. The physician allegedly tied an advertising request to a decision about whose devices he would use. For someone who heard the conversation, the sales value of paying for the screening would have been explicit.

Training Payments With Nobody to Train

The complaint then alleged that a manager proposed completing training request forms for physicians to visit the physician’s facility without actually sending anyone there. The manager also allegedly proposed sending three checks for services that would never be performed.

According to the complaint, the manager knew what the training paperwork concealed:

A training program needs someone to train. On the whistleblowers’ account, the proposed forms and the payments gave the arrangement a purpose the participants knew it would never serve.

This is why the sales conversation matters alongside the payment record. A check described as training compensation tells one story. The alleged advertising demand, device-switch threat and plan to send no physicians tell another. An insider who knew why the payment was proposed could explain what the accounting description left out.

How Device Selection Connects to the Medicare Claim

The alleged benefit went to the vein practice, while the government’s money entered through claims for care involving the catheter. Following that connection means understanding both the sales decision and the provider’s bill.

The broader device industry often separates the person choosing a product from the institution buying it. In its alert on physician-owned entities, the Department of Health and Human Services Office of Inspector General explains that physicians can strongly influence both brand and device type for implantable products, even when a hospital or surgery center buys them. That division helps explain why a manufacturer would direct valuable business support toward a physician’s practice.

Payment also follows the setting. Medicare generally includes implantable and insertable device costs in the hospital outpatient procedure payment. In a physician’s office, medical supplies and equipment enter the practice-expense calculation. The device’s acquisition price and the amount Medicare pays for care serve different purposes.

For ClosureFAST, the government alleged that Covidien’s practice support induced purchases that generated Medicare and Medicaid claims. The sales evidence explains why a provider chose the product. The procedure and billing records connect that choice to the program paying for care.

The 2020 Journal of Forensic and Investigative Accounting paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud explains that healthcare kickback arrangements can involve more complex economic relationships than a payment for services. It also explains that a company can be liable for knowingly causing someone else to submit a false claim. For a device-sales employee, that connects decisions made in different businesses: what the manufacturer offered and what the practice billed.

The Federal Settlement and State Medicaid Payments

The federal settlement addressed Covidien’s alleged practice-development inducements, with separate payments for the state Medicaid claims. The agreement required an additional $1,474,892 to California and $1,047,160 to Florida.

The Justice Department credited Covidien for cooperating with the investigation, sharing the results of its internal investigation and helping develop a damages model.

How Much Is a Whistleblower Claim Worth?

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In the ClosureFAST settlement, the Justice Department announced a $3.15 million share of the federal recovery for the two former sales managers.

The settled lawsuits also included one brought by a former employee of a Covidien customer. The whistleblowers used the False Claims Act’s qui tam provisions to bring claims on the government’s behalf and share in a recovery. Their cases brought perspectives from both sides of the sales relationship: the manufacturer offering practice support and a customer receiving it. That is a useful point for a practice employee who knows what happened when the manufacturer’s personnel arrived, even if the manufacturer’s internal sales decisions happened elsewhere.

What Evidence Is Needed to Prove Fraud?

In a practice-development case, we help connect what the insider saw to the device business and the government claims. The useful evidence shows the service offered, the business it was meant to win and what actually happened. The ClosureFAST complaint makes those connections unusually tangible through the advertising request, device-switch threat, proposed training forms and alleged payment without training.

Our work with an insider is to connect that account to the provider’s device use and claims. A sales manager may understand the offer and the purchasing decision. A practice employee may know who did the advertising work, who attended an event and whether a training session happened at all. The Covidien cases show why both views belong in the same account.

The same referral-building approach appeared in the separate Cardiovascular Systems atherectomy case, which ended in an $8 million settlement. The government alleged that the company distributed marketing materials promoting physicians who used its devices, coordinated meetings with referring physicians and developed business-expansion plans for its customers. The shared mechanism was manufacturer-funded practice growth aimed at the people choosing its products.

In both matters, the alleged inducement reached beyond the device itself. It included help attracting the patients on whom the device could be used. An insider’s account can connect that promise of business to the product decision and the public money that followed.

You Know What the Practice Was Promised

If you saw device business tied to advertising support, referral events or training payments, tell our whistleblower experts what the practice was promised. We work alongside you to build the medical device fraud case and bring in whistleblower lawyers who understand manufacturer kickbacks and provider billing. From the first sales conversation you describe through the pursuit of a recovery, we stay on your side of the table.