Styker Agrees to Settlement With U.S. Government

The medical device maker Stryker will pay the federal government $13.3 million to settle allegations that it bribed public health officials overseas to secure business, a violation of the Foreign Corrupt Practices Act.

The Securities and Exchange Commission (S.E.C.) said Stryker subsidiaries made $2.2 million in illegal payments to government employees in Argentina, Greece, Mexico, Poland and Romania from August 2003 to February 2008. Stryker made the payments to get or retain business, but it recorded them as legitimate consulting and service contracts, travel costs, charitable donations and commissions.

The S.E.C. claims that Stryker made $7.5 million in illicit profits as a result of the illegal payments. Stryker will pay the Treasury $7.5 million, plus $2.3 million in interest. It will also pay a $3.5 million civil penalty.

According to the S.E.C., Stryker had anticorruption corporate policies, but did not do enough to put them in action and legitimately regulate its operations. The company virtually ignored its internal compliance programs.

The Department of Justice and the S.E.C. began investigating the payments in 2007. The government has since closed its investigation into the matter.

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.