(WATCH) VA Investigation

We begin with the story of a whistleblower who says American tax dollars were squandered at a Veterans Affairs medical center in a startling bribery scheme. According to legal claims, for almost a decade a company paid kickbacks to a VA surgical team to order massive numbers of unneeded medical devices, and sometimes use them unnecessarily on vets. Those accused vehemently deny the accusations, and they’re now the subject of a lawsuit and investigations.

The following is a transcript of a report from “Full Measure with Sharyl Attkisson.” Watch the video by clicking the link at the end of the page.

Tom Schroeder’s story as a whistleblower begins almost a decade ago. He was a sales manager at C R Bard, a company that sold devices like stents and balloons that doctors use to de-clog arteries.

Tom Schroeder: Our job as kind of mutual sales component would be us introducing the product, telling them the differences, the benefits. And then the other side of it is they’ll call us and say, “Hey, I want to use that ’cause it sounds like something my patient could benefit from.”

Schroeder stirred a hornet’s nest of controversy involving a competitor, a company called Medtronic.

Schroeder: I was blowing the whistle against a competitor organization. And so it was me watching another company — in this case, Medtronic — abusing a system and, what I allege, abusing veterans’ care.

The scandal centers on Medtronic’s business with this small VA hospital in Wichita, Kansas.

Dole VA Medical Center video: The Wichita Veterans Administration Hospital opened its doors in 1933. Sixty-nine years later, in 2002, the facility was renamed in honor of Robert Joseph Dole.

Schroeder says he heard rumors that Medtronic was bribing doctors and other staff at Dole VA to buy and use an incredible amount of unnecessary medical devices at taxpayer expense.

Sharyl: Do you remember the first moment when you saw something that seemed very strange or suspicious or out of line to you that made you think, “This is not just an accident or a small problem”?

Schroeder: Oh yeah. I’ll never forget it. The incident was my new sales rep that I had hired in Wichita when I took over in 2015, he had finally gotten into the VA, and he called me, and he was like, “Tom, it’s all true. You’ve got to see this. There’s hundreds and hundreds of these drug-coated balloons and atherectomy products on the shelf.” So I drove down the next day, and we walked in there, and sure enough, I took pictures. And I’m like, “This is insane.”

Soon after, he says, one of his account managers told him that even though Dole VA had enough Medtronic products on the shelf to last a couple of years, it was buying still more.

Schroeder: He said, “Yeah, they’re buying 500,000 — or 500 drug-coated balloons—half a million dollars worth of drug coated balloons.” I said, “Well, no, you’ve got to be mistaken, ’cause I was just there taking pictures, and it was already so gross amount of product.” And it was one of those moments where it was over at that point for me. Like, this is a massive issue.

Even worse, Schroeder alleges, VA doctors were inserting excessive numbers of the Medtronic devices in veterans when not medically necessary.

After hearing that many people had flagged the issues to no effect, Schroeder filed a lawsuit in 2017 to blow the whistle. Evidence produced in court seems to raise possible financial motivations.

In 2017, this Medtronic sales representative, Kari Kirk, was in the operating room as doctors put over a dozen Medtronic devices in one vet. During three hours of surgery, she excitedly texts a colleague, Medtronic sales rep Doug Winger.

“Just used 12 [drug-coated balloons]!!” Kirk writes.

“Does that mean I owe u $$” Winger replies.

“Thats what I’m thinking!!! ?,” Kirk says. “And now 14 balloons!?”

Winger: “?- but only one stent so far??”

Kirk: “Thought we were done a few times. Now he’s going back in to cut again!

17!”

Then four happy faces from Winger.

When it’s over: “Just finished,” writes Kirk. “Running to get them lunch.”

Kirk was questioned about the exchange in a deposition.

Deposition video, Attorney: You stated, “That’s what I’m thinking,” three exclamation points. And I think we can agree now that you ended it with some sort of laughing face emoji, right?

Kari Kirk: Yes. I mean, to me, I’m being silly by the exclamation points.

Attorney: Explain that to me. Why were you being silly?

Kirk: I don’t know. Just, I didn’t ask him for that, but yeah, he’s like, “Hey, I can give you a little bonus,” and yeah, I’m just like, “That’s what I’m thinking. Haha.”

Attorney: Based on your recollection, why did you say, “That’s what I’m thinking.”

Kirk: Just because it was a good case. I mean, there was, you know, we sold product during that case.

By that measure, there were lots of “good cases,” and lots of Medtronic product sold to Dole VA.

According to an internal investigation, the medical center bought more of the devices than the top three larger VA hospitals combined — millions of dollars worth.

At the same time, Medtronic representatives were apparently spending significant money buying meals for the VA surgical staff.

Deposition video, Rick Ament: It is improper for the sales representatives to buy meals for employees.

Rick Ament was head of the Dole VA Medical Center at the time. He says he’d grown suspicious when he noticed excessive spending for Medtronic devices. He opened an internal probe into what was going on with Medtronic and the VA surgical team in what’s called the cath lab.

In Ament’s deposition, an attorney reads a partial list of meals Medtronic bought the VA staff.

Deposition video, Attorney: An order for dozen oysters at $34, two orders of those. Filet mignon, two orders for $76. And it goes on, adding lobster tail, two of those for a total of $84. Ribeye for $42, halibut for $40, filet mignon for $76.

In another deposition, Dole VA’s cath lab manager, Terry Brinkley, was questioned about food Medtronic bought for her and others on the team after Medtronic scored a big sale.

Deposition video, Attorney: There is a purchase for 127 drug-coated balloons for over $200,000 on July 24, 2017. Do you see where that’s at?

Terry Brinkley: Yes.

Attorney: We pulled some expense reports again, and roughly a week later, on August 1, there was a statement for $877.52 that Medtronic employees had purchased for the cath lab staff, including you at the Newport Grill. Do you ever recall attending any dinners at the Newport Grill that were paid for by Medtronic?

Brinkley: Yes.

Attorney: And again, this occurred roughly a week after this 127 drug-coated balloon purchase was made. And you understand how a taxpayer may look at that and be concerned that the purchases of these meals might affect your decisions on whether or not to buy these devices from Medtronic?

Brinkley: Yes.

Deposition video, Ament: This is textbook inappropriate. I’ll just leave it at that.

Attorney: Does it give you concerns about kickbacks to influence purchases?

Ament: This clearly gives the impression that influence is trying to be asserted.

Ament: I’ve been running hospitals for 35 years, and this infuriates me.

Attorney: Why does it infuriate you?

Ament: This infuriates me because it feels like the wild West.

Ament shut down the Dole’s VA cath lab in 2018 over the controversy and referred the case to the VA’s Office of Inspector General, which had no comment for our report.

Medtronic declined our interview request but told Full Measure the “allegations in this case are false, and Medtronic will continue to defend the litigation as it moves ahead.” The company also says Schroeder has admitted “he has no firsthand knowledge about any problematic procedure involving Medtronic devices,” that patients were properly referred for the surgeries, and “the physicians used FDA-approved devices from a variety of manufacturers” without receiving additional compensation for the procedures or devices.

Schroeder’s whistleblower lawsuit is moving ahead. He says the experience has taught him to suspect there’s a lot of misspending of American tax dollars that nobody does anything about.

Schroeder: When you, as a person, can identify a weakness in a VA, it becomes a different game, because there is no oversight. It’s not your money. It’s not the person’s money that’s buying the product. It’s my money, it’s your money, it’s everybody’s money who’s watching this. That’s the money that’s being spent, and their job, if nobody’s overseeing it, nobody really cares. It’s just another expenditure on the government budget line.

Sharyl (on-camera): A VA investigation reported that a large spike in costs at the Dole VA were related to buying Medtronic devices. In a recent court filing, the VA said medical records of 59 veterans are being examined for “possible substandard care issues.”

Watch video here.