Exactech to Pay $8 Million to Resolve False Claims Act Allegations Over Defective Knee Implants

Key Takeaways

• Settlement Approved: Exactech will pay $8 million to resolve False Claims Act allegations, approved by the U.S. Bankruptcy Court in Delaware.
• Defective Devices: Allegations centered on two faulty knee replacement components, the finned tibial tray (2008–2018) and polyethylene inserts in Logic and Truliant systems (2019–2022).
• Government Impact: Medicare, Medicaid, and VA programs were billed for surgeries involving these defective implants.
• Whistleblower Payouts: Four whistleblowers will share nearly $1.9 million for bringing the cases in Maryland and Alabama.

Deep Dive

Exactech, a Gainesville, Florida–based medical device company, is paying the price for cutting corners on patient safety. The company has agreed to an $8 million settlement with the U.S. government after being accused of selling faulty knee replacement devices to Medicare, Medicaid, and the Department of Veterans Affairs, a deal signed off by the U.S. Bankruptcy Court in Delaware as the company works through its Chapter 11 case.

The government’s allegations cut to the core of trust in the medical device industry: Exactech, prosecutors say, knew for years that key components of its knee implants were failing at unacceptably high rates but kept selling them anyway.

One of those components, the finned tibial tray, a metal plate designed to anchor into a patient’s tibia, was flagged internally as defective as far back as 2008. Yet the company marketed it for another decade, until 2018, including for surgeries on government beneficiaries. Then, starting in 2019, Exactech allegedly pushed out Logic and Truliant knee systems with polyethylene inserts that it also knew were prone to premature failure. Sales continued until early 2022.

“Patients who need a medical device to enjoy their lives rely on device manufacturers to put patient safety first,” said Kelly O. Hayes, U.S. Attorney for the District of Maryland, who announced the settlement alongside her Alabama counterpart. “When a manufacturer learns that its device is defective, it must promptly and transparently address the problem.”

The settlement is civil, not criminal, but the government will not tolerate companies profiting off devices that don’t meet basic safety standards, especially when taxpayer-funded programs foot the bill.

Of the $8 million, about $7.6 million goes to the federal government, while $360,000 covers the state share. Because the case arose under the False Claims Act’s whistleblower provisions, the insiders who helped bring the claims (Brooks Wallace, Robert Farley, Dr. Manuel Fuentes, and Dr. Pasquale Petrera) will receive a combined $1.9 million for stepping forward.

“Today’s resolution reaffirms our commitment to protect the health and safety of patients,” said U.S. Attorney Prim F. Escalona of Alabama. “Medical device manufacturers must ensure their medical devices, which may be implanted in patients’ bodies, meet the necessary standards of safety and effectiveness at all times.”

While Exactech did not admit liability, the settlement is a stark reminder of what happens when manufacturers gamble with patient trust. For regulators, it’s another notch in the belt of enforcement actions aimed at holding the medical device industry accountable. For patients, it’s a reminder that vigilance, from doctors, regulators, and whistleblowers alike, remains an essential safeguard when profit collides with public health.

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