Orthopedic device makers clear kickback charges after 18 months of good behavior

March 30, 2009 by MassDevice staff

DePuy, Smith & Nephew, Zimmer and Biomet complete deferred prosecution agreements in surgeon kickbacks case; Newark U.S. Attorney says Stryker "satisfactorily" completes its non-prosecution agreement in the case.

Four orthopedic device makers cleared federal criminal charges and a fifth "satisfactorily completed" its non-prosecution agreement with the U.S. Attorney's office in Newark, the Dow Jones news service reported.

Criminal charges were dismissed against DePuy, Smith & Nephew, Zimmer Holdings Inc. and Biomet Inc. (PDF) after they completed terms of deferred prosecution agreements reached in 2007 with the Jersey feds that saw them agree to pony up $311 million in civil settlements.

Stryker Corp., which voluntarily cooperated with the investigation, "satisfactorily completed" the terms of its non-prosecution agreement but didn't take part in the civil settlement.

Prosecutors accused the five device makers, which account for 95 percent of the hip and knee implant market, of improperly paying consulting fees to surgeons between 2002 and 2006 so the doctors would use the companies' artificial hip and knee products.

In a separate announcement, Smith & Nephew's Andover-based endoscopy unit said its patent infringement accusation against Arthrex Inc. was upheld by the U.S. Patent & Trademark office.

The company said a jury last June awarded it with a $14.7 million settlement after determining that Naples, Fla.-based Arthrex infringed on a suture anchor patent exclusively licensed to it by Portland, Ore., Dr. John Hayhurst. The court later upped the award to more than $20 million cover interest and additional damages.

Arthrex had asked the patent office to examine the patent to ensure its validity. The agency's decision upholds Smith & Nephew's claim that it rightfully owns the infringed patent, the company said.