A former sales rep for Zimmer Biomet (NYSE:ZBH) – who is the brother of the FBI agent on whom the movie “Donnie Brasco” is based – yesterday filed a $15 million lawsuit accusing the orthopedics giant of firing him for his grand jury testimony against a doctor who was allegedly performing unnecessary knee replacements.
Dominick Pistone, the brother of former FBI legend Joseph Pistone, spent 25 years selling Zimmer products before the company fired him in June 2015, according to the lawsuit. In 2007, Dominick Pistone became aware that an unnamed physician, referred to as “Dr. X” in his complaint, was “performing numerous double knee replacements, well above the average … primarily for financial gain and not in the best interest of the patients,” using the OtisKnee implant then made by OtisMed.
But that device was never approved by the FDA and eventually led to a 2-year prison sentence for OtisMed’s former CEO and an $80 million settlement for Stryker (NYSE:SYK), which acquired OtisMed in 2009.
“Pistone was very upset with what he saw happening to a large number of patients who were being treated by Dr. X, and who were being exposed to the products of OtisMed Corporation. Upon hearing Pistone’s concerns, his brother advised him to report the violations to the FBI,” he claimed in the complaint.
Pistone then took his concerns to the FBI, but declined to pursue the matter after an agent told him his anonymity could not be assured. He then called Zimmer’s internal whistleblower hotline, established as a part of a deferred prosecution agreement reaching in 2007 over alleged off-label marketing (earlier this month, federal prosecutors accused Zimmer of breaking their deal). There was no follow-up from Zimmer, the complaint alleged.
In June 2010 Dr. X joined an unnamed company and continued his practice of allegedly unnecessary knee procedures, Pistone alleged.
“Indeed, a large number of Company Y nurses and surgeons openly discussed Dr. X’s improper practices in the operating room,” according to the suit.
After a series of anonymous letters to a trio of Pennsylvania district attorneys and a newspaper drew no response, Pistone in February 2015 was subpoenaed by 1 of the DAs, for the Keystone State’s Northampton County, to testify before a grand jury about Dr. X’s alleged malfeasance.
After his March 2015 testimony, Pistone alleged, the CEO of Company Y threatened to sue Zimmer over the anonymous letters Pistone had written. Zimmer fired him June 15, 2015, claiming he had”diminished capacity,” and offered him a $200,000 severance deal that included a clawback option if it was discovered that he broke Zimmer’s conduct code, according to the complaint.
“Zimmer fired Pistone because he did exactly what [Zimmer’s code of conduct] indicated he was supposed to do – disclose violations of applicable law and/or Zimmer’s Code of Conduct,” according to the complaint.
Pistone is seeking $5 million in compensatory damages and $10 million in punitive damages.