Aesculap Implant Systems LLC (Aesculap), a medical device company based in Pennsylvania, has agreed to pay $38.5 million to settle claims that it submitted false Medicare and Medicaid claims, in violation of the False Claims Act (FCA). The Department of Justice (DOJ) says the company “sold knee replacement devices that it knew would fail prematurely,” paid a doctor to use the implants, distributed two medical devices without FDA clearance. The FDA’s Office of Criminal Investigations worked alongside the DOJ and the Department of Health and Human Services, Office of Inspector General together on this case.
From March to August 2017, according to a non-prosecution agreement addressing a violation of the Food, Drug, and Cosmetic Act (FDCA), Aesculap tasked an employee with shepherding “two medical devices through the DCA clearance process.” Instead of submitting the correct documentation, the employee forged documents, which led to both devices being sold illegally, and the employee later pleaded guilty. The devices were the ELAN-4 Air Drill, and a medical instrument sterilization container, the JS Series SterilContainer S2.
“Medical device failures — and their potential to harm patients — are of paramount concern to the Department of Justice,” said Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. “The Department will hold accountable medical device companies that knowingly sell products prone to failure that present risks to patients and waste taxpayer dollars.”
The settlement addresses claims that from July 30, 2010, to June 17, 2023, Aesculap sold the VEGA System Knee System, a type of prosthetic implant for knee replacements, knowing it would fail sooner than expected and was not suitable for use. In knee replacement surgeries, doctors remove damaged bone and insert a device that is held in place with bone cement.
The settlement also resolves allegations of unlawfully paying an unnamed Georgia orthopedic surgeon to “induce him to use and recommend the Vega Knee System, in violation of the Ant-Kickback Statute, 41 U.S.C. 1320a-7b(b).”
The qui tam provisions of the FCA remain one of the most powerful tools for combating healthcare fraud. Under these provisions, private parties can file an action on behalf of the United States and receive a portion of any recovery. The qui tam case is captioned United States ex rel. Marien & McGee v. Aesculap Inc., et al., No. 5:19-cv-1618 (E.D. Pa.). Marien and McGee will receive a share totaling $4,475,000 in connection with the settlement.
Except for the facts admitted by Aesculap as part of the non-prosecution agreement, the claims resolved by the settlement are allegations only, and there has been no determination of liability.
