Biomet Deferred Prosecution Agreement Extended

A 2012 deferred prosecution agreement (DPA) between the U.S. Department of Justice (DOJ), the Securities and Exchange Commission (SEC) and Biomet, Inc., was due to expire on March 26, 2016. However, a March 25 8-K filing from Zimmer Biomet Holdings, Inc., said the DPA would continue past that deadline.

When Zimmer Holdings, Inc. bought Biomet, Inc. for $14 billion in June 2015, it also knowingly bought an ongoing bribery investigation into Biomet’s Brazilian and Mexican sales activities and possible violations of the Foreign Corrupt Practices Act (FCPA).

The government agreed to defer prosecuting Biomet if the company paid a $17 million fine, promised to sin no more and appoint an independent external compliance monitor. The government also retained the right to extend the DPA an extra year.

On March 13, 2015, the DOJ informed Biomet that the DPA and the independent compliance monitor’s appointment had been extended for an additional year.

Three days later, Zimmer filed a report with the SEC stating that Biomet has “terminated, suspended or otherwise disciplined certain employees, ” involved in alleged improprieties [bribes] in Brazil and Mexico. The allegations include “improprieties” that predated the 2012 DPA.

The government had also issued a subpoena on July 2, 2014 to Biomet requiring the company to turn over documents from their investigation.

According to the Zimmer 8-K filing the DOJ and the SEC continue to “evaluate the alleged misconduct in Brazil and Mexico, as well as any issues relating to Biomet’s compliance program. The DOJ, the SEC and Biomet have agreed to continue to evaluate and discuss these matters during the second quarter of 2016…Pursuant to the DPA, the DOJ has sole discretion to determine whether conduct by Biomet constitutes a violation or breach of the DPA. The DOJ has informed Biomet that it retains its rights under the DPA to bring further action against Biomet relating to the conduct in Brazil and Mexico disclosed in 2014 or the violations set forth in the DPA. The DOJ could, among other things, revoke the DPA or prosecute Biomet and/or the involved employees and executives. Biomet continues to cooperate with the SEC and the DOJ, and expects that discussions with the SEC and the DOJ will continue. There is no assurance that Biomet will enter into a consensual resolution of this matter with the SEC or the DOJ, and the terms and conditions of any such potential resolution are uncertain.”