According to news agency Reuters, Smith & Nephew has agreed to pay $11.3 million to settle allegations that it sold the U.S. government devices it claimed were U.S.-made but actually came from Malaysia.
Background
This story sees the culmination of what is now six year old news, having started back in 2008 with the “whistleblowing” of former Smith & Nephew information technology manager, Samuel Cox. Mr Cox claimed that Smith & Nephew violated the federal Trade Agreements Act, which requires contractors to sell the government products made either in the United States or in countries with which it has signed agreements. In 2007 and 2008, Smith & Nephew sold the Department of Veterans Affairs orthopedic devices that it had bought from Malaysia-based Straits Orthopaedics while claiming they were made in the United States, according to the lawsuit. Malaysia does not have a trade agreement with the United States.
Under U.S. law, whistleblowers are entitled to a share of a successful recovery, meaning Cox will get $2.3 million, the government $6 million, and $3 million will go toward attorneys’ fees, according to the settlement.
The case is the first whistleblower settlement involving false country of origin claims for medical devices, according to a press release from Cox’s attorney, Sanford Heisler.
Attorney comments
“Today’s settlement sends a clear message to those medical device companies that routinely violate the Trade Agreements Act by misrepresenting the ‘Country of Origin’ of goods sold under contract to U.S. Government agencies,” Sanford Heisler’s H. Vincent McKnight said in a statement.
Source: Reuters
published: September 8, 2014 in: News, Smith & Nephew