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Feds Seek to Have Stryker Lawsuit Dismissed

Oct 28, 2008 | Parker Waichman LLP

The Justice Department is trying to have a lawsuit filed by Stryker Corp. dismissed.  The lawsuit, which was filed by the company against the federal government in August, is seeking  to prevent the enforcement of a subpoena  Stryker received in February.

The past year or so has been a rough one for Stryker.  In January, Stryker recalled some of its hip implant components made under the popular Trident line because of possible contamination issues.  The Stryker Hip Implant component recall involved two hip replacement cups – the Trident Acetabular PSL Cup and the Trident Hemispherical Cups – made at the Stryker facility in Cork, Ireland.  Acetabular Cups are used in the socket portion of replacement hip components.  The PSL version is the most commonly used Stryker cup in the U.S. The recall came after Stryker received two FDA warning letters about conditions at the Ireland plant, as well as a factory in New Jersey that also makes hip implants.

The subpoena cited in the Stryker lawsuit was issued by the Justice Department and the  Department of Health and Human Services’ Office of Inspector General.  It was part of an investigation into allegations that Stryker submitted false or other improper claims for reimbursement under Medicare and Medicaid.  Stryker says that since it was first subpoenaed in February, it has turned over “300,000 pages of hard copy, multiple compact discs and a DVD of myriad electronic information” to investigators.

In March, Stryker received a letter from investigators expanding the scope of the subpoena, which asks for documents pertaining to corporate structure, management, research, sales, marketing, personnel and consultants.  Stryker’s lawsuit  says the documents requested go “far beyond its orthopedic division and well outside any relationship to Medicare and Medicaid providers.”

In a brief seeking the dismissal of the Stryker lawsuit, lawyers for the government wrote:  “The subpoena required production of all responsive documents by April 28, 2008. However, now - eight months after the subpoena was issued - Stryker still has not complied. Instead, Stryker asked the government to delay seeking judicial enforcement of the subpoena, and then filed this improper pre-enforcement action in an apparent attempt to frustrate the government’s investigation into the company’s conduct.”

In October 2007, Stryker settled with the U.S. Attorney’s Office an earlier investigation in which its orthopedics division was allegedly paying surgeons kickbacks for using Stryker products. At the same time, four other orthopedic-implant-makers also settled and paid $310 million in fines. Stryker cooperated in that earlier investigation and did not pay a fine.

While the settlement included a non-prosecution agreement, Stryker is not protected from further investigation by the Office of Inspector General.


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