Stryker Unit Pleads Guilty To Illegal Sale of Knee Surgery Cutting Guides

A subsidiary of Stryker Corp. has pled guilty to illegally selling knee replacement cutting guides that were never approved by the FDA. 

OtisMed has agreed to pay $80 million to resolve criminal and civil liability charges, according to a December 8 press release by the FDA. In addition, former CEO of OtisMed, Charlie Chi, also pled guilty to charges that the company intentionally sold the artificial knee cutting guides, knowing they were not approved by the agency.

The guides are used to help doctors make accurate cuts during knee-replacement surgery.

According to the FDA, OtisMed Corporation sold more than 18,000 OtisKnee devices from May 2006 to September 2009, and did not seek approval for the devices until October 2008. The agency denied approval in September 2009, saying the devices were neither safe nor effective. Stryker bought the company two months later.

According to the FDA, Chi sent out 218 devices to medical professionals against the wishes of his advisers and the OtisMed board of directors.

The company has agreed to pay a $34.4 million fine and $5.16 million in criminal forfeiture. The company will also pay $40 million in a civil settlement. The company plead guilty to distributing, with the intent to defraud and mislead, adulterated medical devices. Chi plead guilty to charges of introducing adulterated medical devices into interstate commerce.

The FDA estimates that the fines and penalties amount to about three times the revenue the company brought in by illegally selling the cutting guides. Chi is also facing a potential sentence of up to one year in prison and fines of either $100,000 or twice the amount he made from the illegal activity.

“Companies and individuals put the public health at risk by not complying with FDA regulatory requirements for the pre-market review of medical devices,” FDA’s acting director of the Office of Criminal Investigations, Philip J. Walsky said. “We will continue to investigate and bring to justice those who potentially endanger patient safety by distributing unapproved medical devices.”