Aesculap Implant Systems LLC, a manufacturer of medical devices, has consented to pay $38.5 million to settle claims that it knowingly sold knee replacement implants that were susceptible to early failure, leading to false claims made to Medicare and Medicaid, as announced by the U.S. Justice Department on Monday.
Federal prosecutors revealed that the company, located in Center Valley, Pennsylvania, continued to promote its VEGA System knee implants even after realizing that these devices were likely to loosen from patients’ bones shortly after surgery. Such failures often compelled patients to undergo painful and expensive revision surgeries. The government stated that Aesculap failed to inform physicians or regulators about the issue and did not properly monitor or report adverse events.
“Medical device failures — and their potential to harm patients — are of paramount concern,” said Assistant Attorney General Brett A. Shumate, adding that companies would be held accountable for selling products “prone to failure that present risks to patients and waste taxpayer dollars.”
U.S. Attorney David Metcalf of the Eastern District of Pennsylvania said doctors rely on accurate information when selecting surgical implants. “A company that knows its product has a propensity to prematurely fail must not mislead doctors or government regulators,” he said.
Federal authorities also alleged that Aesculap violated the Anti-Kickback Statute by providing consulting payments, international travel, entertainment, and other benefits to a Georgia orthopedic surgeon to induce him to use and recommend the VEGA knee system.
As of April 2024, Aesculap ceased selling all knee replacement devices in the United States.
Non-Prosecution Agreement Over Unapproved Devices
In a distinct move, Aesculap engaged in a non-prosecution agreement regarding the distribution of two medical devices in 2017, which was done without the necessary clearance from the U.S. Food and Drug Administration. Prosecutors indicated that an employee tasked with obtaining FDA clearance for the ELAN-4 Air Drill and the JS Series SterilContainer S2 falsified documents to create the illusion that the devices had received approval. This employee has since admitted guilt for breaching the Food, Drug and Cosmetic Act and has been sentenced to prison.
FDA officials said distributing devices without proper clearance “can put patients at risk,” noting the investigation was conducted jointly with the Justice Department and the Department of Health and Human Services Office of Inspector General.
The settlement resolves a whistleblower lawsuit filed by former Aesculap distributors John Marien and Michael McGee, who will collectively receive $4.48 million as their share of the recovery. The case, brought under the False Claims Act’s qui tam provisions, allowed the pair to sue on behalf of the U.S. government.
Federal officials said the resolution underscores their ongoing efforts to combat health-care fraud and encouraged the public to report suspected wrongdoing to HHS’s fraud hotline.
Prosecutors emphasized that, except for facts admitted in the non-prosecution agreement, the civil allegations remain unproven and no determination of liability has been made.
