Department of Justice Investigation of Orthopaedic Industry*

Abstract

The U.S. Department of Justice investigation of orthopaedic industry changed the business model of orthopaedics in the United States. Collaboration between orthopaedic companies and orthopaedic surgeons changed, the process of developing new orthopaedic products changed, and industry funding of orthopaedic activities and orthopaedic professional organizations changed. This article reviews the Department of Justice investigation of orthopaedic industry, describes the response of multiple stakeholders, and assesses the impact of the investigation on orthopaedic companies, orthopaedic surgeons, and orthopaedic patients. In March 2005, the U.S. Department of Justice, District of New Jersey, launched a federal investigation into financial relationships between orthopaedic companies and orthopaedic surgeons. The U.S. Attorney for the District of New Jersey, Christopher J. Christie, alleged that orthopaedic companies provided improper financial inducements to orthopaedic surgeons to use their products. The alleged inducements included consulting agreements for questionable work, royalty contracts without transfer of intellectual property, trips to luxury resorts for continuing medical education, expensive meals for medical lectures, inappropriate gifts, and payments to surgeons for using specific joint implants. U.S. Attorney Christie claimed that the orthopaedic companies violated federal Medicare-Medicaid Fraud and Abuse Anti-Kickback statutes (anti-kickback statutes) with these activities1,2. The anti-kickback statutes prohibit offering, paying, soliciting, or receiving “any remuneration” in exchange for referrals of any goods, facility, service, or item for which payment may be made under Medicare or Medicaid3. Both the payer and the person or organization that receives the payment are equally culpable; the statutes authorize civil and criminal penalties for parties who offer or receive payment to influence any person to purchase or procure any supply or service that is paid for by the federal or state health plan. The anti-kickback statute's definition of remuneration includes “any kickback, bribe, or rebate [offered] … directly or indirectly, overtly or …