Medical device maker Biomet agrees to pay penalty of $22 million

Medical device maker Biomet Inc. has agreed to pay the government more than $22 million as part of an agreement with the Justice Department to resolve improper payments made by the company and its subsidiaries in violation of the Foreign Corrupt Practices Act (FCPA).

The Justice Department's Criminal Division announced Monday that the Indiana-based company, which manufactures and sells medical devices worldwide, made various improper payments or paid bribes from 2000 to 2008 to health care providers in Argentina, Brazil and China to secure lucrative business with hospitals.

During this time, according to information filed in U.S. District Court in Washington, more than $1.5 million in direct and indirect payments were made. In addition, at the end of each fiscal year, Biomet, its executives, employees and agents falsely recorded the payments on its books and records as “commissions,” “royalties,” “consulting fees” and “scientific incentives” to conceal the nature of the payments, the government said.

The matter was part of an investigation into bribery by medical-device companies of health care providers and administrators employed by government institutions. Previously, Johnson & Johnson and Smith & Nephew Inc. agreed to pay criminal penalties and entered into deferred prosecution agreements related to the investigation.

As part of the agreement, Biomet will pay a $17.28 million criminal penalty and is required to implement rigorous internal controls, cooperate fully with the department and retain a compliance monitor for 18 months.

The agreement recognizes Biomet’s cooperation with the department’s investigation and the company’s remedial efforts and compliance improvements. In addition, Biomet received a reduction in its penalty as a result of its cooperation in the investigation of other companies and persons.

In a related matter, Biomet reached a settlement Monday with the Securities and Exchange Commission under which the company agreed to pay $5.4 million in profits, including pre-judgment interest.

This case was prosecuted by trial attorney Kathleen M. Hamann of the Criminal Division’s Fraud Section with assistance from the FBI’s Washington field office’s dedicated FCPA squad.

Biomet President and CEO Jeffrey Binder said the company has “significantly enhanced” its compliance procedures and financial controls in recent years.

“Moving forward, we intend to continue to adhere to our enhanced global compliance procedures and to promote the company’s commitment to the highest ethical standards in all the markets that we serve,” Mr. Binder said in a statement.

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