Biomet Pays $6M to End Federal Suit Over Bone Growth Device

Biomet Inc. will pay $6 million to resolve a whistleblower’s False Claims Act suit in New Jersey federal court accusing the company of showering doctors’ office staff with kickbacks to encourage use of bone-growth stimulators and improperly billed Medicare for refurbished medical devices.

The settlement, recently announced by the U.S. Justice Department, contains no admission of wrongdoing and involves products sold by Biomet unit EBI LLC that are used to repair slow-healing fractures. Between 2001 and 2008, government attorneys contend, EBI “paid staff at doctors’ offices to influence doctors to order its bone growth stimulators” in violation of the Anti-Kickback Statute. That violation, in turn, triggered FCA liability.

“Medical device companies must not use improper financial incentives to influence the decision to use their products,” said Acting Deputy Assistant Attorney General August Flentje of the Justice Department’s Civil Division.“This settlement demonstrates the department’s commitment to protect patients, and the taxpayers who fund their care, by ensuring that medical decisions are based on the patients’ medical needs rather than the financial interests of others.”

The government claims EBI made the payments under the auspices of personal service agreements with staff members, the DOJ said.

“Kickbacks taint medical decision-making, cause overutilization of services, and lead to increased taxpayer and patient costs,” said Special Agent in Charge Phillip Coyne of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “These improper inducements have no place in government health programs relied on by millions of Americans.”

The settlement also covers Medicare payments made to EBI for refurbished devices, although the department did not specify a reason for deeming those payments fraudulent.

Only a few details were available regarding the allegations against EBI. The case was not immediately available in the federal court system, and Biomet did not comment.

According to the Department of Justice, the suit partly resolves allegations brought by whistleblower Yu Yue, a former EBI product manager. Yue’s share of the $6 million payout has not been determined, the department said.

Separately, Biomet is still embroiled in another FCA case initiated in 2005 that charges the company with defrauding Medicare by duping patients into buying its products rather than renting them. That case, which targets several other device makers, resulted in a $42 million judgement against Orthofix International NV two years ago.

Biomet also is in the process of merging with Zimmer Holdings Inc. in a $13.4 billion acquisition, but the deal is under investigation by the Federal Trade Commission and other antitrust regulators in Europe and Japan.