Joint replacements are the #1 expenditure of Medicare. The process of approving these medical devices is flawed according to the Institute of Medicine. It is time for patients' voices to be heard as stakeholders and for public support for increased medical device industry accountability and heightened protections for patients. Post-market registry. Product warranty. Patient/consumer stakeholder equity. Rescind industry pre-emptions/entitlements. All clinical trials must report all data.
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Friday, March 20, 2015

Bribery, probation, corporate recidivism: Biomet medical device giant.

New Bribery Evidence Adds a Year to Biomet’s Probation

By BEN PROTESS   MARCH 17, 2015  FiDA highlight
Life was supposed to return to normal for Biomet, the giant medical devices manufacturer accused of foreign bribery, when its federal probation expired next week. But on Tuesday, Biomet disclosed that prosecutors would extend its probation another year as they investigate new evidence of wrongdoing at the company, the Justice Department’s latest attempt to stem a widening pattern of corporate recidivism.
The Justice Department is investigating whether Biomet helped bribe government officials in Mexico and Brazil, a painful reminder of an earlier bribery case that Biomet settled in 2012. To resolve the first case, Biomet paid $17 million and struck a so-called deferred prosecution agreement that withheld criminal charges as long as the company behaved during three years of probation.

The disclosure that the Justice Department will extend that agreement — and keep an independent monitor installed at the company — amounts to a double-edged sword for the company. The foreign bribery investigation has loomed over Biomet’s $13.35 billion merger with its rival Zimmer Holdings, raising concerns that criminal charges for Biomet could prompt Zimmer to reconsider.
The Justice Department’s decision to extend the deferred-prosecution agreement, rather than rush out a new criminal case, suggests that the merger appears poised to close.
But the Justice Department’s action also signals that prosecutors consider the new evidence troubling enough that a fuller investigation is warranted, a blemish on Biomet’s reputation whatever the outcome of the case. And the extension of the deferred-prosecution agreement, known as a D.P.A., props open the door for prosecutors, once their investigation is complete, to bring a new round of penalties.
“The D.O.J. has informed Biomet that it retains its rights under the D.P.A. to bring further action against Biomet relating to the conduct in Brazil and Mexico,” the company disclosed in a regulatory filing late Tuesday, adding, “The D.O.J. could, among other things, revoke the D.P.A. or prosecute Biomet and/or the involved employees and executives.
The Biomet case reflects a subtle yet significant shift in the Justice Department’s strategy for combating corporate repeat offenders. Grappling with repeat offenses on Wall Street and across the corporate world, the Justice Department’s criminal division is exploring a different approach, beginning with the extension of some prominent deferred-prosecution agreements.
Biomet is the latest company to have its agreement extended. Last year, the Justice Department added three years to an agreement with Standard Chartered, the big British bank accused of doing business with Iran. And as evidence mounted that banks were colluding to fix the price of foreign currencies, prosecutors extended earlier nonprosecution agreements with Barclays and UBS over their manipulation of interest rates.
The extensions are hardly the harshest option, and critics will most likely argue that anything short of an indictment is a slap on the wrist. Yet the extensions are not intended as the government’s final say on a case but rather a warning to the company and a chance to gain time for prosecutors.




“Make no mistake: The criminal division will not hesitate to tear up a D.P.A. or N.P.A. and file criminal charges where such action is appropriate and proportional to the breach,” Leslie R. Caldwell, head of the Justice Department’s criminal division, said in a speech on Monday. “Just like an individual on probation faces a range of potential consequences for a violation, so, too, does a bank that is subject to a D.P.A.”
In the speech, Ms. Caldwell outlined her policy on repeat offenders in significant new detail. Noting that “we have a range of tools at our disposal,” she said the Justice Department could extend the term of a deferred-prosecution agreement while prosecutors investigate “allegations of new criminal conduct.” And when a breach has occurred, she said, “we can impose an additional monetary penalty” and “most significantly, we can pursue charges based on the conduct covered by the agreement itself — the very conduct that the bank had tried to resolve.”
The ultimate outcome of the Biomet case is unclear.
According to lawyers briefed on the matter, the Justice Department has discussed the possibility of reaching a new deferred-prosecution agreement with Biomet. With that idea, which was preliminary and may change now that prosecutors are extending the original D.P.A., the prosecutors might impose criminal charges on Biomet’s Brazilian and Mexican subsidiaries and any employees at the center of the bribery case.
The problems came to light through an email from an anonymous whistle-blower who reported that distributors Biomet had hired to sell its orthopedic devices were “paying kickbacks” to government doctors. The company disclosed the email to the government, opened an internal investigation and ultimately fired employees viewed as culpable.
Biomet also disclosed the thrust of its problems to Zimmer before striking the merger. And Zimmer, which agreed to pay $13 billion to Goldman Sachs and a handful of private equity firms that own Biomet, showed no sign of backing away.

The deal is expected to close this month or in early April.

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