Medtronic 2012 Annual Report Download - page 33

designated health services if the physician (or a member of the physician’s immediate family) has a financial
relationship with that provider; and (4) health care fraud statutes that prohibit false statements and improper
claims to any third-party payer. There are often similar state false claims, anti-kickback, and anti-self referral
and insurance laws that apply to state-funded Medicaid and other health care programs and private third-
party payers. In addition, the U.S. Foreign Corrupt Practices Act can be used to prosecute companies in the
U.S. for arrangements with physicians, or other parties outside the U.S. if the physician or party is a
government official of another country and the arrangement violates the law of that country.
The laws applicable to us are subject to change, and subject to evolving interpretations. If a
governmental authority were to conclude that we are not in compliance with applicable laws and regulations,
Medtronic and its officers and employees could be subject to severe criminal and civil penalties including
substantial fines and damages, and exclusion from participation as a supplier of product to beneficiaries
covered by Medicare or Medicaid.
We operate in an industry characterized by extensive patent litigation. Patent litigation can result in
significant damage awards and injunctions that could prevent the manufacture and sale of affected products
or result in significant royalty payments in order to continue selling the products. At any given time, we are
involved as both a plaintiff and a defendant in a number of patent infringement actions. While it is not
possible to predict the outcome of patent litigation incidents to our business, we believe the costs associated
with this type of litigation could have a material adverse impact on our consolidated results of operations,
financial position, or cash flows. For additional information, see Note 17 to the consolidated financial
statements in “Item 8. Financial Statements and Supplementary Data” in this Annual Report on Form 10-K.
We operate in an industry susceptible to significant product liability claims. These claims may be
brought by individuals seeking relief on their own behalf or purporting to represent a class. In addition,
product liability claims may be asserted against us in the future based on events we are not aware of at the
present time.
We are also subject to various environmental laws and regulations both within and outside the U.S.
Like other medical device companies, our operations involve the use of substances regulated under
environmental laws, primarily those used in manufacturing and sterilization processes. To the best of our
knowledge at this time, we do not expect that compliance with environmental protection laws will have a
material impact on our consolidated results of operations, financial position, or cash flows.
We have elected to self-insure most of our insurable risks, including medical and dental costs, physical
loss to property, business interruptions, workers’ compensation, comprehensive general, director and officer,
and product liability. Decisions to self-insure are based on comparisons between the price, availability, and
value of insurance coverage. We continue to monitor the insurance marketplace to evaluate the value to the
Company of obtaining insurance coverage in the future. Based on historical loss trends, we believe that our
self-insurance program accruals will be adequate to cover future losses. Historical trends, however, may not
be indicative of future losses. These losses could have a material adverse impact on our consolidated results
of operations, financial position, or cash flows.
Executive Officers of Medtronic
Set forth below are the names and ages of current Section 16(b) executive officers of Medtronic, Inc.,
as well as information regarding their positions with Medtronic, their periods of service in these capacities,
and their business experiences. There are no family relationships among any of the officers named, nor is
there any arrangement or understanding pursuant to which any person was selected as an officer.
Omar Ishrak, age 56, has been Chairman and Chief Executive Officer of Medtronic since June 2011.
Prior to joining Medtronic, Mr. Ishrak served as President and Chief Executive Officer of GE Healthcare
Systems, a division of GE Healthcare, from 2009 to 2011. He was President and Chief Executive Officer
of GE Healthcare Clinical Systems from 2005 to 2008, Vice President and General Manager of GE
Healthcare Ultrasound and BMD from 2000 to 2004, and General Manager, Global Ultrasound from 1995
to 2000.
Michael J. Coyle, age 49, has been Executive Vice President and Group President, Cardiac and Vascular
Group since December 2009. Prior to that, he served as President of the Cardiac Rhythm Management
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