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Stryker Corp. Sues Over Federal Subpoena

Aug 28, 2008 | Parker Waichman LLP

Stryker Corp., the maker of hip implant components recalled earlier this year, is claiming that it is being harassed by two government agencies.  In a lawsuit filed in U.S. District Court in New Jersey on Aug. 15, the device maker claims that a subpoena served by the U.S. Department of Justice and the U.S. Department of Health and Human Services' Office of Inspector General represents an "abuse of process".

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.  The subpoena the company is complaining about is 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." 

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 first, a seven-page letter dated March 15, 2007, cited several violations at the Ireland plant, including missed deadlines to fix failures in following procedures for testing problematic products and documenting risk.  The heavily redacted letter referred to an earlier voluntary recall of “hip fracture stems” which appeared to be related to the problems.  It also cited several instances where the “root cause” of problems that caused that particular recall was not determined.

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