Wright Medical Settles with Government, Enters 5-Year CIA
BY SANDER DUNCAN, OCTOBER 1, 2010
Wright Medical Group announced yesterday that it has settled with the DOJ over their investigation into Wright's consulting practices. The company has entered into a 12-month deferred prosecution agreement (DPA) with the government, under which Wright will not face charges stemming from the investigation as long as they satisfy certain obligations. As is common with DPA's, an independent monitor has been appointed to ensure Wright's compliance with the DPA over its duration.
Wright Medical will also enter into a 5-year corporate integrity agreement (CIA) with the OIG, settling civil and administrative claims for $7.9M while not admitting any wrongdoing. CIA's typically require a company to appoint a chief compliance officer to oversee the company's conduct while under the agreement, though Wright proactively hired such an officer in December 2008 and implemented new consulting procedures to avoid future compliance issues.
These agreements conclude the government's investigation into Wright Medical, commenced in December 2007. Wright's consulting practices with orthopedic surgeons were brought into question, specifically relating to the company's hip and knee products.
The company accrued $8M in anticipation of this settlement and thus does not anticipate these agreements to materially impact their performance in 3Q:10. Wright will announce their earnings on October 28.
