Corporate Compliance

Orthopedic company settles with DOJ for $28 million

Compliance Monitor, October 3, 2007

The Orthopedic Reconstruction unit of Smith and Nephew, Inc. reached a settlement with the U.S. attorney for the District of New Jersey. This followed an investigation in which the DOJ requested copies of the company's consulting contracts with surgeons.

Smith and Nephew will pay more than $28 million in civil restitution, and an external monitor will oversee future contracts between the company and surgeons. Four other large orthopedic companies were also investigated by the DOJ: Biomet, DePuy Orthopedics, Smith & Nephew, and Zimmer. Altogether the companies will pay $311 million for violating the anti-kickback statute and civil federal False Claims Act.

All of the companies have agreed to the following:

  • A federal monitor will be placed at each company to review compliance with the DPAs and NPA and all future and current relationships with the company
  • Each company must conduct a needs assessment to figure out the appropriate needs for educational consulting services and new product development consultants
  • All new consulting agreements will require doctors to show patients their financial engagements with any company and require the companies to show the name of each consultant and what the consultant has paid on their Web site

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