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Stryker Biotech Pleads Guilty, Will Pay $15 Million For Promoting Bone Repair Products

BOSTON - (Mealey's) Stryker Biotech LLC on Jan. 17 pleaded guilty to one federal misdemeanor count of misbranding a medical device and agreed to a $15 million fine for promoting the mixing of its OP-1 and Calstrux orthopedic repair products to health care professionals (United States of America v. Stryker Biotech, LLC, et al., No. 1:09-cr-10330, D. Mass.). 

(Plea agreement available.  Document #28-120119-018P.)

The plea agreement came four days into a felony trial in the U.S. District Court for the District of Massachusetts.  Stryker Biotech and four executives were on trial for wire fraud, conspiracy to defraud the federal government, conspiracy to distribute misbranded medical devices and making false statements. 

The government alleged that the company, former President Mark Philip and sales managers William Heppner, David Ard and Jeffrey Whitaker marketed Calstrux, a bone void filler, to be mixed with OP-1, a bone morhpogenic protein, even though the products were not approved by the Food and Drug Administration to be mixed together. 

The government built its case with the testimony of four former Stryker Biotech employees who were offered plea agreements in exchange for cooperating with investigators. 

Felony Counts Dropped 

The trial against the company and the executives began Jan. 12.  On Jan. 17, the government and the company told the court that Stryker Biotech agreed to plead guilty to one misdemeanor count of misbranding and pay a $15 million fine. 

In a Jan. 17 letter to Stryker Biotech's counsel outlining the agreement, the government said it would dismiss all counts of the original indictment against the company once the fine was paid. 

The plea agreement letter said Stryker Biotech's gross gain from its illegal conduct was $12.5 million.  It said the maximum fine could be $25 million, but the parties agreed to $15 million. 

Civil Litigation On Table 

In a Jan. 17 side letter agreement, the government said it is not currently conducting a civil False Claims Act investigation of Stryker Biotech but said the agreement does not preclude the government from filing such a lawsuit.  In addition, the government said other federal agencies, such as the Department of Justice and the Department of Health and Human Services, are not precluded from taking actions to recover overpayments. 

(Side letter agreement.  Document #28-120119-019P.) 

According to the court docket, Ard was terminated as a defendant on Jan. 17. 

The government is represented by U.S. Attorney Carmen Ortiz and Assistant U.S. Attorneys Jeremy M. Sternberg, Susan G. Winkler and Gregory Noonan of the U.S. Attorney's Office in Boston.   

Defense Counsel 

Stryker Biotech is represented by Brien T. O'Connor, Joshua S. Levy, Aaron M. Katz, Cori A. Lable, Erin E. Conroy and Giselle J. Joffre of Ropes & Gray in Boston.  Philip is represented by Stephen G. Huggard and Hilary B. Dudley of Edwards Wildman Palmer in Boston.   

Heppner is represented by Robert L. Ullmann and Maya L. Sethi of Nutter, McClennen & Fish in Boston.  Ard is represented by Brent J. Gurney of Wilmer, Cutler, Pickering, Hale & Dorr in Washington, D.C. and Robert D. Keefe and Miranda Hooker of Wilmer Hale in Boston.   

Whitaker is represented by Frank A. Libby Jr. and Alathea E. Porter of LibbyHoopes in Boston.   

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