updated 7/18/2006 3:19:59 PM ET 2006-07-18T19:19:59

Medical device maker Medtronic Inc. will pay $40 million to settle allegations the company paid doctors to use its products, the company said on Tuesday.

The allegations centered around its Memphis, Tenn.-based subsidiary Medtronic Sofamor Danek, which makes implants used in back surgery to stabilize a patient’s spine.

Medtronic said the settlement “is consistent with Medtronic’s assertion that the company and its current employees had not engaged in any wrongdoing or illegal activity.”

Medtronic said it has entered a five-year agreement to strengthen employee training and compliance programs for its sales and marketing practices.

The $40 million payment will go into escrow until two civil suits against Medtronic are dismissed, it said. The payment will be a one-time charge in its first quarter, which ends July 28.

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