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Baltimore, MD — Medical device manufacturer Exactech Inc. has consented to pay $8 million to resolve claims that it breached the False Claims Act by distributing defective knee-replacement parts utilized in surgeries funded by Medicare, Medicaid, and the Department of Veterans Affairs (VA). The U.S. Bankruptcy Court for the District of Delaware sanctioned the settlement as part of Exactech’s ongoing Chapter 11 bankruptcy process.
Federal authorities assert that Exactech intentionally promoted and sold flawed components of its total knee replacement systems for several years, despite being aware of their elevated failure rates. These devices were employed in surgeries for beneficiaries of government healthcare.
The case centers around two major issues:
- Finned Tibial Tray (2008–2018): Exactech allegedly continued to sell a metal implant known to fail prematurely.
- Polyethylene Components in Logic and Truliant Systems (2019–2022): The company also marketed systems with plastic components that degraded faster than expected, according to the allegations.
Despite knowing about the failures, Exactech allegedly did not act to remove or recall the components during the specified periods.
“Patients rely on medical device makers to prioritize safety. When defects are discovered, transparency is essential,” said U.S. Attorney Kelly O. Hayes of the District of Maryland. Her counterpart in the Northern District of Alabama, U.S. Attorney Prim F. Escalona, added that the case underscores the government’s commitment to holding companies accountable.
The resolution includes claims made under the False Claims Act’s whistleblower (qui tam) provisions, with two separate lawsuits filed in Alabama and Maryland. The whistleblowers will receive a combined $1.89 million from the settlement.
