Medical Device Manufacturer Agrees to $80 Million Settlement of Criminal and Civil Charges

Last December, the former CEO of a medical device manufacturer pleaded guilty in federal court to criminal charges of selling an adulterated medical device. On top of that, the company has agreed to pay $80 million in a civil and criminal settlement with the Department of Justice.

The device at the center of the controversy is the OtisKnee, a surgical cutting guide meant to help doctors in the performance of knee replacement surgeries by using 3-D software and magnetic resonance imaging to provide guidance to surgeons on the cuts they make. However, the FDA has received dozens of complaints about the device, many from surgeons who found that the guide tended to misalign in the midst of an operation. A study by the Journal of Arthroplasty found that knee replacements implanted with the aid of the OtisKnee were “at high risk of early failure.”

An article co-published by Pro Publica and the New York Times highlights how a botched operation using the OtisKnee increased post-operative pain and problems for a patient, rather than leading to a less painful and speedier recovery, as hoped.

Company Sold Unapproved Medical Devices

What did the manufacturer do wrong? Apparently, the manufacturer of the OtisKnee, OtisMed, heavily marketed its device to doctors as leading to faster and easier operations, despite the potential for misalignment. To make matters worse, OtisMed was selling the device without first obtaining clearance from the FDA. Although OtisMed did apply for FDA approval of the OtisKnee, it classified the surgical cutting tool as a Class I medical device. Class I devices have the lowest risk to patient safety and receive the lowest level of scrutiny by the FDA. Class I devices typically include products such as surgical gloves, elastic bandages and enema kits.

By the time the FDA caught up with OtisMed, the medical device maker had already sold 18,000 units and racked up $27 million in revenue from sales. Even after the FDA rejected the OtisKnee application for failing to meet government standards for safety and efficacy, the company continued to ship another 200 devices. A whistleblower informed the government, leading eventually to the charges and the $80 million settlement.

Knee replacement surgery is the most common elective surgery in the U.S., and ten percent of those surgeries involve replacing prior implants that have worn out or were implanted improperly. Replacement and revision surgeries can involve long and painful recovery periods, and an unsuccessful surgery caused by the negligence or incompetence of the surgeon or a faulty medical device can cause serious and permanent disability. If you believe you were injured due to medical malpractice or a defective medical device, contact the Law Offices of J.J. Talbott in Pensacola for a free case review.