Medical device company Aesculap Implant Systems, LLC, based in Center Valley, Pennsylvania, has agreed to pay $38.5 million to settle allegations that it sold knee replacement devices prone to premature failure, resulting in false claims to Medicare and Medicaid. The settlement was announced by U.S. Attorney David Metcalf and the Department of Justice.
The government alleged that between July 2010 and June 2023, Aesculap sold its VEGA System Knee System for use in knee replacement surgeries while knowing the product would fail at a higher rate than acceptable. The United States claimed that the Vega implant often became loose from patients’ bones soon after surgery, leading to pain and further operations. It was also alleged that Aesculap did not properly record or report adverse events related to the device or take adequate steps to address the issue. As of April 2024, Aesculap ceased selling all its knee replacement devices in the United States.
The settlement also addresses claims that Aesculap made unlawful payments—including consulting fees and free international travel—to a Georgia orthopedic surgeon who had experienced problems with the Vega system, allegedly as an inducement for him to use and recommend the product in violation of federal anti-kickback laws.
“Doctors who implant medical devices need complete and accurate information about those devices to ensure they choose the best and safest options for their patients,” said U.S. Attorney Metcalf. “A company that knows its product has a propensity to prematurely fail must not mislead doctors or government regulators or conceal material information about those known issues. Medicare and other federal programs should not be required to pay charges for devices that are unduly risky, and that may require painful and expensive surgeries to fix.”
Assistant Attorney General Brett A. Shumate added: “Medical device failures — and their potential to harm patients — are of paramount concern to the Department of Justice. The Department will hold accountable medical device companies that knowingly sell products prone to failure that present risks to patients and waste taxpayer dollars.”
Christian J. Schrank from HHS-OIG commented: “Transparency in medical device marketing is essential to safeguarding patient care. Undermining this process to increase profits is a serious violation of federal law that flouts the health and safety of patients. HHS-OIG will continue to work with our law enforcement partners to uncover and dismantle illegal arrangements that exploit the Medicare system for financial gain at the expense of patients.”
Aesculap also entered into a non-prosecution agreement concerning two medical devices distributed without FDA clearance between March 2017 and August 2017—the ELAN-4 Air Drill used for bone cutting, sawing, drilling; and JS Series SterilContainer S2 used for sterilizing instruments—after an employee forged documents claiming FDA approval when none had been granted. That employee previously pleaded guilty in federal court.
Ronald Dawkins from FDA stated: “Certain medical devices require FDA notification and clearance before distribution to the public. Distributing such medical devices without FDA clearance and in violation of the Federal Food, Drug, and Cosmetic Act can put patients at risk. The FDA’s Office of Criminal Investigations (OCI) worked with the Justice Department and HHS-OIG to ensure a just resolution, and we commend the exceptional work done by the team.”
The civil settlement resolves whistleblower lawsuits filed under False Claims Act provisions by John Marien, Michael McGee, and Brad Stafford.
Multiple agencies participated in investigating this case including offices within DOJ; HHS-OIG; FDA’s Office of Chief Counsel; as well as Assistant United States Attorneys Charlene Keller Fullmer and Erin Lindgren from Eastern District Pennsylvania; Senior Trial Counsel Nicholas C Perros; Trial Attorneys Max J Goldman and Bryson N Gillard; former Assistant U.S Attorney M Beth Leahy; FDA-OCI; and HHS-OIG.
According to authorities involved in this case—apart from facts admitted by Aesculap through its non-prosecution agreement—all other claims resolved remain allegations only with no determination yet made regarding liability.
