Wright Medical Technology to Pay $7.9 Million to U.S.

Wright Medical Technology Inc. agreed to pay $7.9 million to resolve U.S. criminal and civil investigations into whether it paid kickbacks to induce doctors to use its hip and knee devices.

Prosecutors in Newark, New Jersey, today charged Wright with conspiring to violate a federal anti-kickback statue through consulting contracts with orthopedic surgeons. The U.S. agreed to drop the case in 12 months if a monitor agrees that Wright has reformed the way it hires consultants.

Wright, based in Arlington, Tennessee, also agreed to a $7.9 million civil settlement with the Justice Department and inspector general of the Health and Human Services Department to resolve fraudulent-marketing claims. The company entered into a five-year corporate integrity agreement.

“The deferred prosecution agreement and monitor oversight will hold Wright to a high ethical standard,” First Assistant U.S. Attorney J. Gilmore Childers said in a statement. “We are committed to the continuing investigation and prosecution of both companies and individuals who enter into illegitimate consulting relationships.”

The alleged crimes took place from 2002 through 2007. The monitor will be James B. Tucker, former U.S. attorney for the Southern District of Mississippi.

Federal prosecutors in Newark in 2007 charged Johnson & Johnson’s DePuy Orthopaedics Inc., Zimmer Holdings Inc., Biomet Inc. and Smith & Nephew Inc., makers of hip- and knee-implant devices, with conspiring to violate the anti-kickback law.

Criminal Charge

The government agreed to defer prosecution if they paid more than $310 million and made reforms. The cases ended in 2009.

“We are pleased to announce these agreements and look forward to working with the independent monitor as we continue our commitment to the highest standards of ethical and legal conduct,” Wright Medical Chief Executive Officer Gary D. Henley said in a statement.

“Patients in federal health care programs deserve the best available treatment from physicians and surgeons without the corrupting influence of kickbacks,” Tom ODonnell, special agent in charge of New Jersey for Health and Human Service’s inspector general, said in a statement.

To contact the reporter on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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