Hip, knee implant makers agree to pay $311M settlement
Posted by John P. Martin and Jeff Whelan September 27, 2007
The nation’s largest manufacturers of hip and knee implants today agreed to
pay $311 million to settle allegations that they bribed top surgeons to
recommend their products.
Agents gathered evidence that orthopedic surgeons routinely accepted lavish
vacations, gifts and annual "consulting fees" as high as $200,000 from medical
device makers in return for endorsing their implants or using them in
The 30-month investigation, headed by federal prosecutors in New Jersey, marks
one of the larger settlements of its kind and follows a wave of cases to
spotlight questionable ethics within the health care industry.
"With these agreements in place, we expect doctors to make decisions based on
what is the best interest of their patients – not the best interest of their
bank account," U.S. Attorney Christopher Christie said in a statement.
The agreements covered five firms, including DePuy Orthopaedics, a subsidiary of
New Jersey-based Johnson and Johnson. Together, the companies control more than
90 percent of the U.S. market in reconstructive implants, a billion-dollar field
expected to surge in coming years.
Three of the manufacturers — DePuy, Zimmer Holdings and Biomet, Inc. — are
based in Warsaw, Ind. The others are Stryker Corp., of Kalamazoo, Mich. and
Smith and Nephew PLC, of London.
The civil settlements ranged from $169 million for Zimmer to $26.9 million for
Biomet, based in part on the market share of each defendant, authorities said.
Stryker will not pay any money.
In criminal complaints filed in federal district court in Newark, the companies
admitted paying surgeons consulting fees that violated the federal Medicare
Fraud Statute. The law prohibits companies from offering inducements to doctors
who participate in Medicare. About two-thirds of the 700,000 knee and hip
replacement surgeries performed each year are covered by Medicare.
As part of the agreement, each will also pay for a federal monitor to supervise
their practices for 18 months. The monitors include former U.S. Attorney General
John Ashcroft and the former U.S. Attorneys for New York and Los Angeles.