Investing.com -- The U.S. Department of Justice announced on Thursday that it reached an agreement on a $4.4 million settlement with medical device maker Medtronic (NYSE:MDT), Inc. for violation of the False Claims Act.
The violation stems from false statements made by the company regarding the sale of medical equipment to the U.S. Department of Defense and the U.S. Department of Veteran Affairs during an eight-year span from January 2007 until September 2014. Over that period, the company claimed the equipment was manufactured in the U.S. when in fact the products originated in China and Malaysia.
Under the Trade Agreement Act of 1979, companies with contracts with the government are required to manufacture the products in the U.S. or other designated countries. Companies that sell products to the government from China and Malaysia are in violation of the agreement. The products at issue include: sleeves sold with cardiac leads, instruments and devices used in spinal surgery and a wireless cardiac device.
“Today’s settlement demonstrates our commitment to ensure that our service members and our veterans receive medical products that are manufactured in the United States and other countries that trade fairly with us,” said Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division in a statement. “The Justice Department will take action to hold medical device companies to the terms of their government contracts.”
Medtronic, the world's third largest medical device company, became the largest company in Ireland in January following its $49.9 billion acquisition of Dublin-based surgical supplies group Covidien. At the time, Medtronic's market capitalization was valued at approximately $100 billion.
Shares in Medtronic rose slightly on Thursday by 0.73 points or 0.96% to 76.87.