Stryker’s OtisMed unit pays $80 million to settle DOJ case for sale of unapproved knee replacement surgical guide

Stryker Corporation’s OtisMed Unit has paid more than $80 million to settle a criminal and civil Department of Justice investigation which was started by a whistleblower under the False Claims Act. According to the complaint, OtisMed was selling devices used to help surgeons guide knee replacement components during knee surgery even though it had no FDA approval to do so.

The company admitted it never obtained U.S. Food and Drug Administration approval to sell 18,000 custom-built devices used by surgeons from 2006 to 2009 to make accurate bone cuts to implant prosthetic knees.

OtisMed applied for FDA approval in October 2008, and the agency said 13 months later the company hadn’t shown it was safe and effective. The company then shipped 218 devices to surgeons, overruling his advisers and board.

More than 700,000 knee replacement surgeries are performed every year which makes it the most common elective surgery in the country. OtisMed, an Alameda California startup developed three dimensional software guides using  MRI imaging to help surgeons direct the angle of surgical cuts to tailor bone cuts to patient’s anatomy. However, the company never received proper FDA approval. Ultimately, the product was found to be defective including the fact that the cutting guides warped when they were sterilized before surgery.

The problems were brought to light by whistleblower Richard Adrian who worked in sales for Stryker, who filed a whistleblower case under The False Claims Act. He will receive a portion of the $80 million which is being paid to the government as is allowed under this law. His counsel has not commented publicly on the settlement as of this writing.

Jeffrey Newman represents whistleblowers but did not represent Mr. Adrian in the case referenced above.