Biomet Faces Probes Over Bone Growth DevicesApr 21, 2009 | Parker Waichman LLP
Biomet Inc. has revealed that it is facing several federal probes over its bone growth stimulation devices. According to The Wall Street Journal, Biomet disclosed the federal investigations in a filing with the Securities and Exchange Commission (SEC) last week.
According to the SEC filing, the U.S. Attorneys Office in West Virginia is investigating the "sales and marketing practices" of its EBI unit in Parsippany, N.J. The EBI unit makes osteogenesis and bone growth stimulation devices that enhance the regeneration of bone in post-surgical patients, The Wall Street Journal said. Meanwhile, the U.S. Attorney in Massachusetts has launched a probe into alleged improprieties in the sale and leasing of the devices.
According to The Wall Street Journal, the federal probe in West Virginia stems from a whistle blower lawsuit that claims Biomet promoted its spine-surgery devices through "an elaborate and clandestine promotion of illegal and off-label uses." According to that lawsuit, Dr. John A. King at Putnam General Hospital in Hurricane, W.Va., implanted devices in clinical research without asking for the consent of the patients. The complaint also alleges that on 15 occasions, a representative of Biomet's EBI unit was in the operating room while the spinal products were used in off-label procedures, the Journal said.
In addition to the West Virginia probe, Biomet's EBI unit has been named in 38 medical negligence claims in the state involving Putnam and his use of the company's Ionic Spine Spacer device and OsteoGen stimulation devices. According to The Wall Street Journal, Putnam faces a total of 120 malpractice lawsuits alleging chronic pain and other damages.
In its SEC filing, Biomet said it believed a subpoena it received from the Boston U.S. attorney's office is related to another whistle blower lawsuit that was filed in March 2005. According to The Wall Street Journal, in that complaint the owner of a Missouri medical billing company claimed several spine companies, including Biomet, were improperly billing bone-growth stimulators as devices that must be purchased, rather than rented.
According to a report in the Fort Wayne Journal Gazette's website, that suit said the purchase price for the stimulators is about 10 times more than it would typically cost to rent the devices. The stimulators have been billed almost without exception as purchase items, according to the suit
Biomet and the other companies named in the suit are alleged to have misled physicians and their clerical staff into filing paperwork indicating the devices are medically necessary for a patient’s lifetime or for periods that exceed nine months, the Journal Gazette said. At least one of the companies – and likely all – routinely waived the 20 percent coinsurance Medicare patients pay, according to the lawsuit, a violation of the federal anti-kickback statute.
In its SEC filing, Biomet denied any wrongdoing, but said it intends to cooperate with authorities.