Wright medical technology, inc. deferred prosecution agreement with government extended for 12 months
FOR IMMEDIATE RELEASE
September 15, 2011
NEWARK, N.J. – The 12-month Deferred Prosecution Agreement executed in September 2010 by Wright Medical Technology, Inc. – a publicly-traded national manufacturer and distributor of orthopaedic implant devices and supplies based in Arlington, Tenn. – has been extended by another 12 months, First Assistant U.S. Attorney J. Gilmore Childers announced.
The Deferred Prosecution Agreement (DPA) was set to expire Sept. 29, 2011. A related criminal Complaint alleging that Wright used consulting agreements with orthopaedic surgeons as an inducement to use its artificial hip and knee reconstruction products was to have been dismissed after the expiration of the DPA. Instead, Wright has voluntarily agreed to a 12-month extension of the terms of the DPA, as outlined in an Addendum and Amendment to the DPA filed today in Newark federal court.
Under the original terms of the DPA, the agreement could only have been extended for a period of six months, for a total period of 18 months; the DPA Addendum extends the total period of the monitorship to 24 months. Provided that Wright meets all of the requirements of the DPA Addendum, the agreement will expire on Sept. 29, 2012, and the Criminal Complaint will thereafter be dismissed.
Pursuant to the terms of the DPA, Wright had agreed to accept the appointment of a federal monitor to, among other things, review its compliance with the terms of the DPA. Since September 2010, Wright has been monitored by James B. Tucker, former U.S. Attorney for the Southern District of Mississippi.
In the last several months, Wright has undergone extensive changes in senior management. On April 5, 2011, Wright announced that its then-president and CEO had tendered his resignation prior to a board meeting called to discuss management’s oversight of the company’s compliance program. On that same day, Wright announced that it had terminated its senior vice president and chief technology officer for cause – for failing to exhibit appropriate regard for the ongoing compliance program. On May 4, 2011, Wright announced the resignations of three executives without “good reason,” including the general counsel.
By letter dated May 5, 2011, the Office notified Wright that it had received information that Wright had knowingly and willfully breached material provisions of the DPA. To date, the U.S. Attorney’s Office has not made a determination on whether there has been a material, knowing, and willful breach of the DPA that has not been adequately cured. Under the terms of the DPA Addendum, if the Office does not find by Sept. 29, 2012 that Wright has committed such a breach, the U.S. Attorney’s Office will take no further action regarding any breach of the DPA referenced in the May 5 letter. In exchange, the material terms of the DPA remain unaltered and in effect for another 12 months; the only exception is that the DPA Addendum requires only three monitor reports during the twelve-month extension period, rather than four as required in the first year.
Based on the amendment to the DPA, the Department of Health and Human Services Office of Inspector General (HHS-OIG) and Wright also amended Wright’s Corporate Integrity Agreement (“CIA”) to continue the suspension of certain CIA provisions during the extended period of the DPA. The amendment does not extend the suspension of one provision, regarding compliance with the anti-kickback statute, which will take effect on Sept. 29, 2011. This provision requires Wright to adopt certain procedures governing its handling of arrangements with actual sources of health care business or referrals to Wright.
“As a direct result of the federal monitorship, Wright has made significant and wide-ranging changes in corporate culture and tone at the top,” First Assistant U.S. Attorney Childers said. “Our Office is pleased with the extensive cooperation from the newly-appointed interim senior management team. Today’s extension will allow Wright to make the transition from interim to permanent senior management while still under the terms of the DPA and the surveillance of the federal monitor.”
First Assistant U.S. Attorney Childers credited special agents of HHS-OIG, New York Regional Office, under the direction of Special Agent in Charge Tom F. ODonnell; and special agents of the U.S. Postal Inspection Service, under the direction of Inspector in Charge Philip R. Bartlett, for their work in reaching the original agreement.
The government is represented by Assistant U.S. Attorney Joseph Mack of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark.
Defense counsel: Karen F. Green Esq., Boston