Medical Device Company Exactech Agrees to $8 Million Settlement Over Defective Knee Implants

Exactech Inc., a medical device company headquartered in Gainesville, Florida, has agreed to pay $8 million to resolve allegations that it violated the federal False Claims Act by knowingly submitting false claims for defective knee-replacement devices to government healthcare programs. The settlement, approved by the U.S. Bankruptcy Court for the District of Delaware as part of Exactech’s Chapter 11 bankruptcy proceedings, addresses claims concerning two distinct components of the company’s total-knee replacement systems.

The resolution stems from allegations that Exactech was aware of premature failures in its finned tibial tray, a metal component of its knee replacement system, at a rate considered unacceptable. This issue reportedly persisted from at least January 2008 until December 2018, during which time the company continued to market and sell the component for use in surgeries on beneficiaries of Medicare, Medicaid, and the Department of Veterans Affairs (VA). The government contended that due to the high failure rate, these devices were not reasonable or necessary for implantation in these patient populations.

Furthermore, the settlement addresses allegations that Exactech knew about premature failures in the polyethylene component of certain Logic and Truliant knee-replacement systems as early as January 2019. Despite this knowledge, the company allegedly continued to sell these systems with defective polyethylene components for use in knee-replacement surgeries until February 7, 2022. The government asserted that these specific components were also not reasonable or necessary for use in surgeries performed on government beneficiaries due to their higher-than-acceptable failure rates.

This civil settlement includes the resolution of claims brought forward by whistleblowers under the False Claims Act. Two separate whistleblower actions, one filed in Alabama and another in Maryland, contributed to the investigation and resolution. The whistleblowers will collectively receive a portion of the settlement amount, totaling over $1.8 million. The settlement amount reflects Exactech’s current financial condition.

The U.S. Attorney’s Office for the District of Maryland, in coordination with the U.S. Attorney’s Office for the Northern District of Alabama and the Justice Department’s Civil Division, spearheaded the investigation. This case underscores the government’s commitment to combating healthcare fraud and ensuring the safety and efficacy of medical devices used by patients. Individuals with information about potential fraud, waste, or abuse in healthcare programs are encouraged to report it to the Department of Health and Human Services.

Article by Mel Anara, based upon information from the U.S. Attorney’s Office, District of Maryland.

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