Arthrex Pays $16M to Settle Kickback Allegations

Naples, Florida-based Arthrex Inc. has agreed to pay $16 million to settle allegations that it violated the False Claims Act by paying an orthopedic surgeon kickbacks to use its products.

Arthrex is a global medical device company focused on orthopedics. Primarily, its emphasis is on new product development and medical education.

The allegations involve Arthrex and orthopedic surgeon Peter Millett, M.D., MSc. The United States alleges in the settlement agreement that Arthrex paid Dr. Millett millions of dollars in what it called royalty payments for the SutureBridge™ and SpeedBridge™ kits. Surgeons use these kits in joint repair surgery. The United States contends that these alleged royalty payments were actually used to induce Dr. Millett to “purchase, order, or recommend the purchasing or ordering of Arthrex medical devices.”

The United States claims that Arthrex violated the Anti-Kickback Statute by “providing remuneration” to Dr. Millett to induce him to “purchase and recommend Arthrex products.” Furthermore, the United States claims that from August 2010 through March 2021, these payments by Arthrex caused orthopedic surgeon Dr. Millett to submit false claims for payment to Medicare, in violation of the False Claims Act.

In the United States Department of Justice press release, Acting United States Attorney Nathaniel R. Mendell commented, “Paying bribes to physicians to distort their medical decision-making corrupts the health care system.”

Mendell continued, “This settlement demonstrates our dedication to ensuring that taxpayers and patients get a health care system that is on the level. Kickbacks have no place anywhere in our health care system, and we will continue to identify and punish this illegal conduct.”

Dr. Millett strenuously disputes the allegations in the lawsuit saying in a statement sent to OTW: “Dr. Peter Millett is a world-renowned surgeon who invented a groundbreaking surgical technique and played a key role in developing Arthrex’s surgical products that are now the gold standard in arthroscopic rotator cuff repairs. The DOJ’s contentions regarding Arthrex’s royalty payments—contentions Arthrex neither admits nor denies in its settlement with DOJ—are manifestly untrue.”

“The truth is that Arthrex properly agreed to pay Dr. Millett, who in his arms’ length dealings with Arthrex was represented by legal counsel, royalties for his invention and contributions, which have tremendously improved surgical outcomes for millions of rotator cuff repair patients throughout the world, including some of the most elite athletes in professional sports.”

“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.”

The original complaint in this matter was brought by a whistleblower in February 2020 in the U.S. District Court for the District of Massachusetts. The whistleblower filed its action based on the qui tam provisions of the False Claims Act. The whistleblower is entitled to a share of the settlement amount, in this matter the whistleblower will receive $2,500,000, plus interest and other fees and costs. This includes attorney’s fees, costs, and expenses in the amount of $347,448.65.

As part of the settlement Arthrex agreed not to take any action or to make or permit to be made any public statement denying, directly or indirectly, any of the Covered Conduct or creating the impression that the Covered Conduct is without factual basis.