Stryker Moves to Settle DOJ Probe

Kalamazoo, Mich.-based Stryker Corp. offered $33 million to the U.S. Department of Justice (DOJ) to end a probe into marketing practices involving its OtisKnee device, the company reported in an Securities and Exchange Commission filing June 5.

“We recently entered into discussion with the DOJ regarding the potential settlement of this matter, and on May 31, 2012, we offered $33 million to the DOJ,” according to the filing, signed by Curt Hartman, Stryker’s interim chief executive officer, as well as the company’s vice president and chief financial officer.

Stryker is taking the $33 million charge in the second quarter of 2012, which it expects to reduce its diluted earnings by 9 cents a share. The company will exclude the charge from its adjusted diluted earnings per share.

In 2010, the company received a subpoena alleging there had been violations of laws that prohibit marketing medical devices that had not been cleared by the U.S. Food and Drug Administration.

A final settlement has not been reached with the Department of Justice, Stryker said in the filing, and there is no timetable for when or if such a resolution might occur. The $33 million represented the company’s “best estimate of the minimum of the range of probable loss to resolve this matter.”
In 2010, Stryker received a subpoena alleging violations of laws prohibiting sales of a medical device not cleared for marketing by the U.S. Food and Drug Administration.

Stryker acquired privately held OtisMed Corp. in 2009. OtisKnee technology is designed to help surgeons custom fit Stryker knee implants.