False Claims Act Defendant Agrees to Sell Off Fraudfeasing Subsidiary

For too long, fraudfeasing companies have been permitted to remain in business, even after settling False Claims Act allegations. Recently, the Justice Department vowed to ramp up the “cost of doing” business for fraudsters, by holding individual executives accountable and by ordering the divesture of dishonest subsidiaries.

Recently, the Justice Department lived up to its promise, when it inked a settlement with medical device manufacturer Synthes Inc. and its subsidiary Norian Corp. The agreement required these two companies to pay fines totaling $23.2 million and to plead guilty to charges that they illegally experimented with a spinal bone cement on patients. Specifically, the defendants had allegedly trained surgeons to use the cement “off-label” so the company could gather data to support its expanded use. This illegal activity caught the eye of the government after three patients died on the operating table.

Norian pled guilty to conspiracy to impede federal safety standards, a felony, and 110 related misdemeanors. Synthes avoided a felony conviction by agreeing to sell Norian and by pleading guilty to a misdemeanor of shipping a mislabeled product in interstate commerce. In addition, four former Synthes executives pled guilty or no contest to related misdemeanors.

For more information about qui tam law and health care fraud, contact Nolan & Auerbach, P.A.

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