Last week, Gainesville, Florida-based medical device company Exactech Inc. agreed to pay $8 million to resolve allegations that it violated the False Claims Act (FCA) by knowingly selling defective total knee-replacement systems used in knee-replacement surgeries performed on Medicare, Medicaid and Veterans Affairs (VA) beneficiaries.
Because Exactech has filed for bankruptcy under Chapter 11, the $8 million settlement amount is based on Exactech’s compromised financial condition, and does not represent the Government’s typical damages calculus in a False Claims Act settlement, which is a multiplier of the actual damages the Government sustained by not receiving the benefit of the fully functional knee replacements it had contracted for and paid to receive.
This case is unusual in that the whistle sounded not once, as is the typical situation in a qui tam case, but twice. The $8 million settlement resolves two separate FCA lawsuits brought by two sets of whistleblowers – a case filed in the Northern District of Alabama by three whistleblowers (Brooks Wallace, Robert Farley, and Dr. Manuel Fuentes) and a case filed in the District of Maryland by Dr. Pasquale Petrera.
In the Alabama case, whistleblowers Wallace and Farley were sales representatives at Exactech, and Dr. Fuentes was a senior member of Exactech’s marketing team. In the Maryland case, whistleblower Dr. Pasquale Petrera is a Maryland orthopedic surgeon who performed knee replacement surgeries using the Exactech...
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