Another Whistleblower at Medtronic?

Is another whistleblower behind the latest request by the United States Attorney for information from Medtronic, Inc.?

In a June 24, 2013 SEC 10-K filing, the company disclosed that the U.S. Attorney in Minnesota requested information relating to the company’s compliance with the Trade Agreement Act (TAA). The filing also said the company was fully cooperating with the inquiry.

Tom Beimers, a former U.S. Department of Justice prosecutor and now an attorney with Faegre Baker Daniels LLP, told us that whistleblower attorneys are showing an increased interest in this fairly obscure law that implements the World Trade Organization (WTO) agreement on government procurement. He added that we can’t know whether Medtronic is dealing with a whistleblower, but a recent settlement with the government, says Beimers, “may pique the interest of other manufacturers.”

Recent Settlement

The settlement referred to by Beimers involved a $5.66 million payment by a subsidiary of Illinois-based CDW Corporation, a reseller of information technology, equipment, services, office supplies and related products. The settlement resolved allegations that, during the period 1999 to 2011, the subsidiary improperly charged government purchasers for shipping, sold products to the United States that were manufactured in China and other countries that are prohibited by the Trade Agreement Act, and underreported sales in order to avoid paying GSA (U.S. General Services Administration) its “Industrial Funding Fee, ” a fee based on total contract sales that is designed to cover GSA’s costs of contract administration.

Company Whistleblower

The allegations arose from a lawsuit filed in a federal court in East Saint Louis, Illinois, under the qui tam or whistleblower provisions of the False Claims Act. The relator in this case, former company sales representative Joe Liotine, will receive $1, 585, 892.56 of the total recovery as a statutory award.

Trade Agreement Act

Mass Device’s Brad Perriello reported on June 25 that the TAA governs acquisitions of more than $193, 000 by the U.S. government. Its “rule of origin” provision mandates that those products must be either made in the U.S. or from a “designated country” that’s part of a trade agreement with the U.S. But several countries that produce medical devices, including China, India, Malaysia, Taiwan and Thailand, are not designated countries under the act.

That means, wrote Perriello, that any U.S. government purchases from those nations are legal only if no U.S.-made or designated country-made alternatives are available