Federal Court Says Exactech Must Face Trial for Misbranded and Defective Knee Replacement Device

On July 25, 2022, a federal judge for the Northern District of Alabama issued a Memorandum of Opinion that ordered medical device manufacturer Exactech, Inc. (Exactech) to face a jury trial regarding False Claims Act (FCA) allegations that Exactech knowingly sold a defective and misbranded knee replacement device.  Specifically, the allegations–brought by Frohsin Barger Walthall & Bucy’s (FBWB) clients–claim that Exactech knew its Optetrak knee replacement device was defective and caused widespread device failures yet Exactech continued to sell the device and refused to submit Adverse Event Reports to the FDA, as required by the Food, Drug and Cosmetics Act.

Largely denying Exactech’s multiple motions to have the case thrown out, the Court ruled the case should go to trial holding that “by plausibly showing that Exactech’s Finned Tibia Tray (the defective component) was ‘misbranded’ and not ‘reasonable and necessary’ in violation of governing healthcare laws, Relators sufficiently show that claims for payment of the device were false under the FCA.”

The Court Rules That Failure to Submit Adverse Event Reports Can Cause False Claims. 

The Court’s Order affirms that when a medical device manufacturer violates the FDA’s requirements for reporting adverse events (which are required to be submitted to the FDA whenever a medical device causes a death or serious injury), then the device becomes misbranded and illegal to sell in the United States.  Accordingly, because the Court found evidence showed that Exactech received reports of device failures, but did not submit the required adverse event reports,  “Relators have sufficiently shown that Exactech violated its mandatory reporting obligations in violation of healthcare laws, rendering the Finned Tibia Tray misbranded and making any subsequent claim for payment of the device improper.”

Additionally, the Court ruled that the evidence indicated that the Finned Tibia Tray was not “reasonable and necessary,” in violation of Medicare and Medicaid reimbursement laws.   Therefore, by continuing to sell the defective device to the Medicare and Medicaid programs, Exactech violated the False Claims Act.

Exactech’s Misleading Marketing Materials Established an Issue of Fact Whether Exactech Made False Statements in Violation of the FCA.

The Court also held that a jury should decide whether Exactech made or caused to be made multiple false statements in violation of the FCA.  One example of these false statements is Exactech’s representation that the Finned Tibia Tray has a superior failure rate.  Exactech’s marketing materials referenced a study that claimed the device failed in only one percent of patients, five years after implantation  However, this study was based on a different device, Exactech’s “Trapezoid Tibial Tray”–not the Finned Tibial Tray which FBWB’s clients showed had a true failure as high as 25%.

False Claims Act Trial and Qui Tam Provisions

As a result of the Court’s Order, the case will proceed to jury trial–where FBWB’s clients will have the opportunity to have a jury hear their case.  If the jury rules for FBWB’s clients, the False Claims Act provides statutory damages of three times the amount that the Government was damaged due to the defective and misbranded knee replacement device, as well as civil monetary penalties between $11,181 and $22,363 for each violation of the FCA.  Because the United States did not intervene in this case, FBWB’s clients are entitled to 25-30% of the total recovery as their award for bringing this case.

FBWB would like to thank and congratulate our brave clients and our excellent co-counsel at the Beasley Allen Law Firm for this hard fought victory and we look forward to opportunity to present this case at trial.

To read the Court’s Order, please click here

For more information about medical device fraud and the False Claims Act, please contact Frohsin Barger Walthall & Bucy.