Zimmer Deferred Prosecution Agreement 2007

The solution for the first four companies listed above was a deferred prosecution agreement (“DPA”), a civil settlement and a corporate integrity agreement (“CIA”). Stryker Orthopedics, Inc., which, according to the press release, “cooperated with the U.S. Attorney`s Office prior to any other company,” entered into a non-prosecution agreement (“NPA”) but did not enter into a civil or CIA settlement agreement and therefore did not receive an exemption from civil or administrative liability. Unauthorized attempts to upload information and/or modify information on any part of this website are strictly prohibited and subject to prosecution under the Computer Fraud and Abuse Act of 1986 and the National Information Infrastructure Protection Act of 1996 (see Title 18 U.S.C §§ 1001 and 1030). Jeffrey Binder, CEO of Biomet, noted that the agreement did not contain any admissions of responsibility or wrongdoing, saying in a statement that the company would work with the independent monitor and other authorities “to establish and review additional practices and procedures to comply with healthcare regulations.” David Dvorak, President and Chief Executive Officer of Zimmer, said: “We believe this resolution is in the best interests of our shareholders, and we are pleased that the agreement preserves our ability to work with physicians to improve patients` quality of life. It is important to note that solution agreements clearly define how we and our key competitors will interact with healthcare professionals, setting a standard of conduct across the industry. We believe that because of our current enterprise compliance program, which we developed in 2004 and implemented in 2005, Zimmer is well positioned to meet the requirements of comparison. U.S. Attorney Christopher J. Christie acknowledged that Zimmer`s current program already meets many of the compliance requirements contained in agreements with orthopedic companies.

The common allegation in the five cases is that each of the companies entered into consulting agreements with orthopaedic surgeons, under which the companies paid to get surgeons to use that company`s hip and knee replacement products. “The monitors used by companies have been a key driving force in fully integrating the objectives and requirements of the agreements into companies` business practices,” Marra said. “These changes will ensure that medical consultants are not held for the volume of their business, but for the legitimate consulting services they can provide. All of these changes were made at no cost to taxpayers. Last but not least, patients are better served because they know that their doctors are making decisions in the best interests of patients and not in the financial interests of physicians. At the time the DPAs began and the lawsuits were filed, Zimmer, Depuy Biomet Inc., and Smith & Nephew reached civil settlements with the Department of Justice and the Office of the Inspector General of the U.S. Department of Health and Human Services (HHS-OIG), paying a total of $311 million to settle government claims under the Anti-Bribery Act and the federal Anti-Bribery Act. false civil claims.

They also entered into five-year Corporate Integrity Agreements (AIAs) with HHS-OIG. These agreements remain in force and require further reforms and oversight under the supervision of HHS-OIG. On September 27, 2007, the government accused companies of using consulting contracts with orthopaedic surgeons to induce them to use a particular company`s artificial hip and knee reconstruction and replacement products. The investigation showed that this was a common practice of enterprises from at least 2002 to 2006. Surgeons who had agreements with companies typically received tens of thousands to hundreds of thousands of dollars a year for consulting contracts and were often inundated with travel and other expensive benefits. According to the agreement with the government, doctors who act as consultants must disclose the agreements to their patients. Companies are also required to disclose on their websites the name of each consultant and what they have paid. A copy of zimmer`s deferred prosecution agreement and an overview of Zimmer`s corporate compliance program were posted on the company`s website, www.zimmer.com. WARSAW, Indiana, Sept. 27, 2007 /PRNewswire/ — Zimmer Holdings, Inc. (NYSE: ZMH; SWX: ZMH) announced today that it has completed an ongoing federal investigation with the U.S. Attorney`s Office in New Jersey into its financial relationships with consulting orthopedic surgeons.

Under the terms of the settlement, Zimmer has entered into a deferred lawsuit agreement, pays a civil settlement amount of $169.5 million, and is subject to the oversight of a federal comptroller appointed by the U.S. Department of Justice for 18 months. Zimmer did not admit to any wrongdoing, pleaded not guilty, and paid no fines under the settlement. In addition, the government has agreed not to lay criminal charges against the company if it complies with the deferred prosecution agreement. As part of the federal regulation, the company also enters into a five-year business integrity agreement with the Office of the Inspector General of the Department of Health and Social Services. Zimmer understands that the other four orthopaedic companies involved in this case have also entered into settlement agreements. The Company expects to record $169.5 million in settlement expenses in the third quarter. “With these agreements, we expect physicians to make decisions based on what is in the best interest of their patients – not in the best interest of their bank accounts.” A fifth company, Stryker Corp, will not pay a civil settlement, but has reached a no-suit agreement with the government and has agreed to reforms, including federal oversight. Stryker voluntarily cooperated with prosecutors before any other company, Christie said. Visit rooms on the World Wide Web under www.zimmer.com Copyright (C) 2007 PR Newswire. All rights reserved Zimmer, DePuy, Biomet and Smith & Nephew have entered into deferred prosecution agreements with the government that expire in 18 months if the reforms are respected.

Criminal charges have been filed against the four companies accusing them of conspiring to violate federal law against the anti-bribery law, but they will be rejected if the reforms are implemented. On September 27, 2007, the U.S. Attorney`s Office for the District of New Jersey announced settlements with five companies (Biomet, Inc., Depuy Orthopaedics, Smith & Nephew, Inc., Zimmer, Inc., and Stryker Orthopedics, Inc.) to clarify anti-bribery allegations. The investigation began in March 2005, when Zimmer and four other orthopaedic companies received subpoenas from the US Department of Justice through the US Attorney`s Office in Newark, New Jersey, for information on consulting contracts, professional services contracts and other agreements by which orthopaedic surgeons will receive compensation. Zimmer fully cooperated with federal authorities throughout the investigation and settlement process. “We are confident that the industry that has engaged in illegal corrupt practices to gain market share has made significant changes to its practices to strengthen compliance programs, increase compliance staff, and improve internal compliance policies and procedures,” Marra said. “We expect them to continue these actions beyond the expiry of the agreements and are committed to maintaining a culture of openness, accountability and compliance.” Thanks to the intervention of the government, DPAs and NPA, consultant payments to surgeons by all combined companies for ongoing consulting activities increased from $272 million in 2007 to $105 million in 2008, a decrease of 61 per cent. .

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