Biomet Settles In Clinician Bung Case

In short

According to an article which has appeared in Bloomberg this week, Biomet Inc. has agreed to pay $22.7 million to settle U.S. criminal and civil allegations that it bribed government-employed doctors in Argentina, Brazil and China for more than eight years to win business with hospitals.

Background

They’re not the first and they probably won’t be the last. For as long as clinicians are specifying products to be acquired for them in countries and situations where procedures are lax enough for them to get away with it, companies and clinicians have been unable to resist the temptation to line each others’ pockets at the expense of someone else.

We’ve reported several instances on our pages over recent weeks and months, not least Guidant and the army cardiologist here, Smith and Nephew’s Greek doctor case here, as well as the well-publicised J&J DePuy Greek scandal of a few years ago.

Biomet’s case relates to orthopedic products including hip or knee implants. According to Bloomberg, the government accused the company of violations of the Foreign Corrupt Practices Act in Argentina, Brazil and China from 2000 to August 2008. The law prohibits bribery of foreign government officials or company executives to secure or retain business.

Apparently employees and managers at all levels of the parent company and four subsidiaries were involved, along with distributors who sold Biomet products. The government has accused Biomet’s internal procedures of failing to halt the illegal bribes to doctors even though they were allegedly known about.

As with the Smith & Nephew case, the Justice Department (JD) and the Securities and Exchange Commission(SEC) have reached a settlement with Biomet, meaning it will pay a $17.3 million criminal penalty but won’t be prosecuted by the Justice Department if it institutes strict internal controls to prevent bribery and hires an expert to monitor its compliance for 18 months. The company also agreed to pay $5.4 million in restitution to resolve the SEC’s civil charges.

SEC’s position¬†

“A company’s compliance and internal audit should be the first line of defense against corruption, not part of the problem,” Kara Brockmeyer, the head of the SEC enforcement division’s unit that deals with foreign bribery cases, said in a statement.

Right, the hip’s in, where’s my cash?

Unbelievable as it may be to those of us who continue to reside in a rose-tinted world in which healthcare provision and medical professionals are above this sort of thing, the Bloomberg article states that; “Some emails described the way that device vendors would deliver cash to surgeons after they finished operating, and others discussed the amounts of bribes, according to the government.”

Company comments

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,” Binder said in a statement.

The Justice Department said it acknowledged that Biomet had cooperated in the investigation and had taken corrective action. In addition, the amount of the criminal penalty takes into account Biomet’s cooperation in the investigation of other companies and individuals, Justice said.

We say

Is it human nature, need or greed? Why do we keep hearing these stories? The problem is that in some countries it actually seems to be an inescapable part of the culture, so if you’re Biomet or any other company, and you want to sell your goods, especially if you use a local distributor, you’re going to need ultra-vigilance to stay the right side of the moral code, let alone SEC’s rules.

Source: Bloomberg