Exactech Inc. (NSDQ:EXAC) settled with federal prosecutors over kickbacks charges for $3 million.
The Gainsville, Fla.-based orthopedic implant device maker will pay the fine and enter into a year-long deferred prosecution agreement with the New Jersey U.S. attorney’s office, which launched a probe into Exactech’s arrangements with physicians in 2007.
Exactech said the agreement ends the investigation by the attorney’s office.
A criminal complaint by the Dept. of Health & Human Services charged that the company offered or solicited payments to orthopedic surgeons "in exchange for, in part, the surgeons’ use of Exactech’s hip and knee reconstruction and replacement products," which was in violation of the Anti-kickback statute.
Exactech used consulting agreements with the physicians as vehicles for the kickbacks from January 2002 through late 2008, according to court documents. The deals were "designed and implemented, in part, to induce the surgeons to use, and cause the purchase of, Exactech’s… products."
As part of the company’s punishment, it agreed to post the deferred prosecution agreement on its website for a year. The company also separated the roles of corporate council and chief compliance officer, appointing a new CCO. That individual will join the company’s chairman and CEO Bill Petty and other corporate officers in regularly meeting with the U.S. attorney’s office and an independent monitor appointed by the attorney’s office (although the monitor is allowed access to any employee and individuals or firms with distribution agreements with the company). The monitor is also charged with reviewing and approving new consulting agreements the company has with physicians at his or her discretion.
“We are pleased to resolve this inquiry, which we feel is in the best interest of our stakeholders. We will continue to practice the highest standards of ethics, which have been and will continue to be hallmarks of our corporate culture,” Petty said in prepared remarks.
The company pointed out in its prepared statement that the U.S. attorney’s office does not allege that the company’s conduct, which precipitated the investigation, “adversely affected patient health or patient care.”