According to Law.com, the Department of Health and Human Services reports that about 700,000 hip and knee replacements are performed each year, and two-thirds are performed on patients covered by Medicare.
U.S. Attorney Christopher Christie announced last week at a news conference in Newark, NJ, that "surgeons who had agreements with the companies were typically paid tens to hundreds of thousands of dollars per year for consulting contracts and often were lavished with trips and other expensive prerequisites," according to Law.com.
Christie also said that these actions were in violation of the Medicare and Medicaid Patient Protection Act of 1987, 42 U.S.C. §1320a-7b. This law deems it illegal for companies to pay doctors to sway the referral of Medicare or federal healthcare business.
As a result, four of the country's leading hip and knee implant manufacturers recently agreed to pay the federal government $311 million in fines to avoid prosecution for allegedly paying surgeons to use their products. The companies include Biomet, the DePuy Orthopaedics unit of Johnson & Johnson, Zimmer Holdings, and Smith & Nephew.
The four companies were charged with criminal conspiracy to violate anti-kickback laws. However, by paying the settlement fees and complying with procedures under federal monitoring for 18 months, they will not face prosecution.
According to The New York Times, an additional company, Stryker Orthopedics Inc., also agreed to be monitored but chose not to settle with the other companies. Stryker Orthopedics was not charged with conspiracy, as it was "the first to cooperate in the investigation."
Together, the five large companies account for almost 95% of the hip and knee implant market.
According to Law.com, FBI Special Agent in Charge Weysan Dun said, "This fraud affects the price and quality of healthcare. It's just as significant as a corruption investigation and ensures that doctors' decisions are based on a patient's best interest, not their wallet."
The manufacturers also agreed that for a period of five years, they would report any payments that they make to surgeons, in addition to providing training programs that will encourage fair and ethical practices.
Under the settlement terms Zimmer will pay $169.5 million, DePuy will pay $84.7 million, Smith & Nephew will pay $28.9 million, and Biomet will pay $26.9 million.
According to Law.com, Christie said that about 50% of the fines will go to the Medicare Trust Fund and the rest will pay settlement costs.
