Monday, July 16, 2012

Stryker Offers $33 Million to U.S. Department of Justice for Fraudulent Marketing of Knee Systems and Pain Pump Devices

Stryker Corp, headquartered in Kalamazoo, MI, offered the United States Department of Justice $33 million in May 2012 to resolve 2010 allegations regarding a knee device. The company recognizes that this offer is preliminary and it is indefinite as to whether a "resolution will be reached".

A filing signed by interim CEO Chris Hartman stated, "We recently entered into discussion with the DOJ regarding the potential settlement of this matter, and on May 31, 2012, we offered $33 million to the DOJ." The company claimed that the $33 million represented "our best estimate of the minimum of the range of probable loss to resolve this matter."

In 2010 Stryker received  two subpoenas from the U.S. Department of Justice regarding the marketing of its OtisKnee and PainPump devices. These subpoenas, filed with the Securities and Exchange Commission, regarded regulatory matters related to the sales and marketing of the devices that had not been cleared by the U.S. Food and Drug Administration.

OtisMed, a software technology firm, was acquired by Stryker Corp in 2009 for $103 million. As a subsidiary of Stryker Corp, OtisMed focuses on customizable instrumentation that has the potential to complement the many benefits that surgeons and patients realize from Stryker's Triathlon Knee System, as well as other Stryker implants. Simply, the OtisKnee provided surgeons with software that facilitated a 'custom cut' on a patients knee which sought to produce higher success rates of a Total Knee Arthroplasty. This custom cut allowed surgeons to custom fit Stryker total knee devices onto patients knees.