Devices Neurosurgery Orthopaedic Litigation

 News Release - May 22, 2008

Kyphon Settles Qui Tam Suit

MINNEAPOLIS--(HSMN NewsFeed)--Medtronic, Inc. (NYSE:MDT ) announced today that Kyphon Inc., has signed a final settlement agreement with the U.S. Department of Justice. This settlement agreement formalizes the resolution reached by Kyphon, prior to its acquisition by Medtronic, of a 2005 civil qui tam action filed against Kyphon in the Western District of New York. The settlement requires Kyphon to pay $75 million plus accrued interest to the United States, to settle allegations relating to reimbursement advice that the company gave to customers regarding Kyphoplasty procedures. The settlement agreement reflects the company’s assertion that Kyphon and its employees had not engaged in any wrongdoing or illegal activity.

In addition to the payment, Kyphon will enter into a Corporate Integrity Agreement (CIA) with the Office of Inspector General for the Department of Health and Human Services. The CIA focuses on training about appropriate reimbursement advice to customers, and also requires maintenance and implementation of standard compliance processes.

The case pre-exists the November 2007 acquisition of Kyphon by Medtronic and had been publicly disclosed in Kyphon’s pre-acquisition SEC filings. The settlement amount had been reserved on Kyphon’s books prior to the closing of the acquisition by Medtronic; therefore Medtronic will not be incurring a charge related to this settlement.

About Medtronic

Medtronic, Inc. (www.medtronic.com) is the global leader in medical technology – alleviating pain, restoring health and extending life for millions of people around the world.

Any forward-looking statements are subject to risks and uncertainties such as those described in Medtronic’s Annual Report on Form 10-K for the year ended April 27, 2007. Actual results may differ materially from anticipated results.

Source: Medtronic

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