Medical device company Arthrex agreed to pay $16 million to settle allegations that it paid a doctor to boost sales, the U.S. Justice Department announced Monday.
The privately held company allegedly paid Colorado-based orthopedic surgeon Dr. Peter Millett millions of dollars under the guise of royalty payments. While Arthrex and Millett have had a royalty agreement since 2010 for his help in developing SutureBridge and SpeedBridge kits, federal authorities contend that the company paid him royalties that were higher than the typical rate to get him to use and recommend its products. A whistleblower alleged that this caused other providers to submit false claims, violating the False Claims Act and anti-kickback statutes.
"Paying bribes to physicians to distort their medical decision-making corrupts the healthcare system," said Acting U.S. Attorney Nathaniel Mendell said in a news release.
Arthrex, which entered into a five-year corporate integrity agreement with HHS' Office of Inspector General, did not immediately reply to requests for comment.
Millett denied any wrongdoing, his lawyer Marc Kasowitz of Kasowitz, Benson Torres LLP said.
"Whatever Arthrex's reasons for entering into its settlement, Dr. Millett unquestionably was entitled to those royalties, and the fact that DOJ has not commenced any action against Dr. Millett confirms that he has never engaged in any improper or illegal conduct," Kasowitz said in a statement.
The whistleblower Joseph Shea, a Massachusetts resident and former Arthrex sales representative, will receive more than $2.5 million.
Devicemakers often pay surgeons via royalty or consulting contracts to help them design new implants. But federal watchdogs are increasingly cracking down on those arrangements amid ethical and legal concerns.
Arthrex has paid physicians more than $315 million in royalty, license and consulting fees since CMS' Open Payments starting tracking the data in 2014.