What's in Store for Stryker? 07 Settlement Gives Clues
BY LAUREN UZDIENSKI, SEPTEMBER 10, 2008
Stryker's bold move a few weeks ago of suing the DOJ over an ongoing investigation has been the subject of wide speculation, and while little is known for sure about what prompted their action, last year's settlement offers some insight.
To start, last fall, Stryker entered into a Non-Prosecution Agreement (NPA) with the DOJ. Biomet, DePuy, Smith & Nephew and Zimmer all entered into Deferred Prosecution Agreements (DPAs), were ordered to pay $311 million in fines and signed Corporate Integrity Agreements. Stryker was not fined and avoided criminal charges (the difference between an NPA and DPA is that charges are filed in the latter, though they're dismissed at the end of a specified period, assuming the conditions of the DPA are met.) This appeared to reflect Stryker's early and voluntary cooperation with the DOJ's investigation.
However, under the conditions of their DPAs, Biomet, DePuy, Smith & Nephew and Zimmer were released from further civil liability. Stryker was not granted this protection, effectively allowing the government to continue its investigation. So while the physician payment allegations appeared publicly to be resolved, the government continued to subpoena documents. This led to Stryker's lawsuit, filed last month.
SYK's complaint calls the DOJ/OIG subpoenas "overly broad" and says the DOJ is seeking to harm the business. The company says they've already submitted over 300,000 pages of documents that prove they're innocent of the alleged violations.
In response to that, the OIG petitioned a U.S. district court to order SYK to produce immediately all requested documents from the February 2008 subpoena. They add that Stryker has "staunchly refused" to offer a timetable or agree to deadlines to produce the documents. We don't yet know the outcome of the latest petition, that is, whether Stryker will be forced to turn over further materials.
We also don't know what the DOJ has in mind for Stryker. Some analysts predict that the company could enter into a new settlement, this time to include a fine and an agreement similar to the ones already in place for the other companies. We'll be watching closely to see what develops from this largely unexpected ramification of Stryker's 2007 settlement.
