Wright Medical Pays $8M to Settle Hip Implant Kickback Charges

Wright Medical Technology, Inc. has agreed to pay $7.9 million to settle government accusations of paying kickbacks to orthopedic surgeons who pushed its hip and knee implants onto patients. The agreement ends an industry-wide investigation by federal authorities that has resulted in hundreds of millions of dollars in settlements from other orthopedic device makers as well. 

The Wright Medical kickback settlement agreement (pdf) was announced by the Department of Justice (DOJ) on Thursday and also includes a corporate compliance agreement and federal monitoring. The company is the last of six implant manufacturers to settle charges with the DOJ, including DePuy Orthopaedics, Inc., Zimmer Holdings, Inc., Stryker Orthopaedics, Inc., Biomet, Inc., and Smith & Nephew, Inc. All of the companies were accused of using consultant agreements with orthopedic surgeons to get them to use their hip and knee implants.

The DOJ says that the kickback scheme lasted from 2002 through 2007, when most of the companies reached settlements. The companies paid a combined total of $310 million to settle the charges and their activities were monitored until March 2009, when the charges were officially dropped after it was determined that they had remained in compliance with their agreements.

Wright has agreed to 12 months of federal monitoring, after which the DOJ will drop its criminal charges if the company maintains compliance; an agreement known as a Deferred Prosecution Agreement (DPA). The $7.9 million is a civil settlement with DOJ and the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG) for fraudulent marketing practices in violation of the False Claims Act. It has also agreed to sign a five-year Corporate Integrity Agreement (CIA) with HHS-OIG. Similar CIAs are still in effect for DePuy, Zimmer and the other companies until September 2012.

The payment of kickbacks to orthopedic surgeons for using certain implants has caused particular concerns amid a number of recalls and problems that have surfaced among some devices sold by these companies.

In August, a DePuy hip implant recall was issued for 93,000 metal-on-metal ASR Hip Resurfacing Systems and ASR XL Acetabular Hip Systems, after it was discovered that the DePuy ASR failure rate was at least 12% within five years. A number of lawsuits over the DePuy ASR hip have been filed, alleging that the manufacturer knew about the increased risk of complications, yet continued to market the implant and encourage surgeons to use it.

Similar issues with a higher-than-expected rate of hip revisions led to the August 2008 recall of the Zimmer Durom Cup, which is a newer tupe of artificial hip that was introduced in 2006. Lawsuits over the Zimmer Durom Cup have been filed by patients throughout the United States, alleging that the manufacturer heavily promoted this new hip implant without providing adequate warnings or instructions about the proper use and surgical techniques required. The product was temporarily pulled from the market in 2008 so that Zimmer could revise the warnings on the product and develop a new training program for surgeons, but that was not until after at least 12,000 of the hips were implanted in the United States.

Zimmer announced in August that they were setting aside $75 million in its 2010 second quarter financial report to cover potential Zimmer Durom Cup settlements.

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