Exactech Inc., a medical device manufacturer headquartered in Gainesville, Florida, has agreed to pay $8 million to resolve allegations that it violated the federal False Claims Act. The case centers on claims that Exactech knowingly submitted or caused the submission of false claims for payment to Medicare, Medicaid, and the U.S. Department of Veterans Affairs regarding defective knee replacement devices.
The settlement addresses two main components of Exactech’s total knee replacement systems. According to the agreement, as early as January 2008, Exactech was aware that its finned tibial tray—a metal part used in knee replacements—failed prematurely at a rate higher than acceptable. Despite this knowledge, the company continued marketing and selling this component for use in surgeries involving Medicare, Medicaid, and VA beneficiaries from January 1, 2008 through December 31, 2018.
Additionally, the settlement resolves allegations that starting in January 2019, Exactech became aware that certain polyethylene components in its Logic and Truliant knee replacement systems also failed prematurely. Nevertheless, these products were marketed and sold for use during total-knee replacement surgeries involving government beneficiaries between January 1, 2019 and February 7, 2022.
“Today’s resolution reaffirms our commitment to protect the health and safety of patients,” said Prim F. Escalona, U.S. Attorney for the Northern District of Alabama. “Medical device manufacturers must ensure their medical devices, which may be implanted in patients’ bodies, meet the necessary standards of safety and effectiveness at all times.”
Hayes added: “Patients who need a medical device to enjoy their lives rely on device manufacturers to put patient safety first. When a manufacturer learns that its device is defective, it must promptly and transparently address the problem. We will hold companies accountable who knowingly sell defective devices.”
Under terms of the settlement agreement, Exactech will pay $8 million overall; $7.64 million constitutes the federal share while $360,000 pertains to state shares with separate agreements expected between states and Exactech regarding those funds. The settlement amount takes into account Exactech’s financial condition.
The civil settlement also resolves whistleblower claims under the qui tam provisions of the False Claims Act by Brooks Wallace, Robert Farley and Dr. Manuel Fuentes (United States ex rel. Wallace v. Exactech) in Alabama federal court and by Dr. Pasquale Petrera (United States ex rel. Petrera v. Exactech) in Maryland federal court. Under these provisions private individuals can file lawsuits on behalf of the United States and receive a portion of any recovery; here whistleblowers from Alabama will receive $1,329,360 while the Maryland whistleblower will receive $565,360.
Federal authorities including the Justice Department’s Civil Division (Commercial Litigation Branch), Fraud Section as well as U.S. Attorneys’ Offices for both Northern District of Alabama and District of Maryland coordinated efforts with support from Health & Human Services Office of Inspector General.
The Department emphasized ongoing efforts against health care fraud using tools such as the False Claims Act; tips about potential fraud or abuse can be reported at 800-HHS-TIPS (800-447-8477).
Assistant U.S. Attorney Don Long (Northern District of Alabama), Assistant U.S. Attorney Matthew Haven (District of Maryland), and Senior Trial Counsel Michael Hoffman (Civil Division’s Commercial Litigation Branch) managed aspects related to this matter.
Officials noted that resolved claims are only allegations; no determination of liability has been made.
