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The United States Attorney in New Jersey announced that he has accepted fines of $311 million from the four largest medical device companies in exchange for not prosecuting them on federal kickback charges. The four companies are Depuy Orthopaedics Inc., a subsidiary of Johnson & Johnson in New Brunswick; Smith & Nephew Inc. of Memphis, Tenn.; Biomet Orthopedics of Warsaw, Ind.; and Zimmer Inc. of Warsaw, Ind. They agreed to pay the fine to avoid prosecution for giving financial inducements to doctors who used their hip and knee replacement products. There were about 1,000 orthopedic surgeons involved in the kickback scheme and there is no indication of whether or not the doctors involved will be prosecuted.

The United States Attorney said the companies activities violated the Medicare and Medicaid Patient Protection Act of 1987, 42 U.S.C. §1320a-7b. The statute makes it illegal for companies to pay doctors to influence the referral of Medicare or federal health care business. Accepting kickbacks is a felony punishable by a fine of up to $25,000 per act and five years in prison.

FBI Special Agent in Charge Weysan Dun said:, “This fraud affects the price and quality of healthcare. It’s just as significant as a corruption investigation and ensures that doctors’ decisions are based on a patient’s best interest, not their wallet.” U.S. Attorney Christie said the deferred-prosecution route was the best solution for all sides. “In reaching this settlement, we didn’t want to use the power of this office to destroy companies.”

For more information on this subject, please refer to the section on Drugs, Medical Devices, and Implants.

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