Feds investigate artificial-hip maker

NEWARK, N.J. - The US Justice Department is investigating whether Stryker Corp., the third-largest maker of artificial hips and knees, illegally paid surgeons to induce them to use company products, according to a court filing.

Government lawyers disclosed the scope of the investigation in a lawsuit last week against Stryker. The company signed a nonprosecution agreement last September after cooperating in a separate probe of whether it paid kickbacks to surgeons who used its products. Prosecutors deferred criminal charges against four Stryker competitors that agreed to pay $310 million.

The Justice Department and the Health and Human Services Department's Office of Inspector General is probing the nature of $40 million in payments that Stryker made last year to almost 200 physicians through consulting agreements and other financial relationships, according to a government lawsuit filed Aug. 26.

"HHS-OIG is investigating allegations that Stryker used such consulting agreements and other financial relationships to unlawfully induce orthopedic physicians" to use Stryker products in surgeries reimbursed by Medicare, according to a memorandum with the lawsuit in federal court in Grand Rapids, Mich.

Katherine Owen, a spokeswoman for Kalamazoo, Mich.-based Stryker, and company attorney Herbert Stern didn't immediately return calls for comment.

The government's complaint followed a Stryker lawsuit filed Aug. 15 in federal court in Newark seeking to quash a subpoena demanding documents. Those documents relate to Stryker's financial relationships with surgeons, its marketing and sales budgets for orthopedic devices, and its corporate structure relating to interactions with doctors.

Investigators are probing whether Stryker violated the antikickback statute, according to government lawyers.