Medtronic paying $85M to end shareholder lawsuit

NEW YORK (AP) — Medical device maker Medtronic Inc. has agreed to pay $85 million to resolve a federal class action lawsuit brought by a group of shareholders.

In December 2008, the Minneapolis Firefighters Relief Association filed a lawsuit alleging Medtronic made false and misleading public statements about its InFuse bone repair protein. The plaintiffs said Medtronic did not disclose how much of the company's revenue from InFuse came from "off-label" uses, or uses that have not been approved by regulators, did not disclose the side effects that some of those patients were suffering, and did not disclose what the plaintiffs described as illegal marketing.

The world's largest medical device company said Friday that it did not make any misrepresentation and did nothing wrong.

The firefighters' group manages pension funds for Minneapolis firefighters and their families.

The original lawsuit claimed Medtronic's actions inflated the company's stock price, and when the company's actions were revealed, the stock fell. The suit was consolidated into a class action in 2009.

InFuse is approved for use in spinal, oral and dental graft procedures, but most of the time it was used in neck surgeries and other procedures. Physicians are allowed to use drugs and medical products off-label as they see fit, but companies are not allowed to market their products for off-label uses. Use of InFuse in neck surgeries can lead to problems swallowing, breathing and speaking. In some cases those problems required additional surgeries.

The U.S. Department of Justice sent Medtronic a subpoena in 2008 as it looked into off-label uses of InFuse. Earlier the same year, the family of a California woman sued Medtronic, saying the patient died because InFuse was used in a surgical procedure on her neck. The family said a Medtronic representative encouraged the woman's surgeon to use InFuse shortly before the procedure.

In 2011 a medical journal said Medtronic downplayed side effects associated with InFuse, including a condition that can cause infertility in men. The journal also criticized studies of InFuse, saying that in some cases, side effects were not disclosed because the authors of studies on InFuse were consultants paid by Medtronic. The bad publicity has hurt sales of InFuse, which totaled $750 million in 2010. That was most of the revenue from Medtronic's spine business.

Medtronic shares lost 2 cents to $39.19 Friday, and the stock picked up 3 cents to $39.22 in after-hours trading.

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