Medical Device Daily National Editor

SAN FRANCISCO – Concerns over physician/industry relationships started long before last year’s Department of Justice (DoJ) probes that resulted in several of the big-hitter companies in the orthopedic arena becoming parties to big-dollar (well northward of $300 million) negotiated settlements.

But interest in those relationships clearly is heightened these days, as was shown by both attendee and media response to a pair of sessions held last Friday during the American Academy of Orthopaedic Surgeons (AAOS; Rosemont, Illinois) annual meeting here.

First, a crowd estimated at some 800 strong packed one of the Moscone Convention Center meeting rooms for a lengthy give-and-task from a panel comprised of speakers from both the legal and industry sides of the fence. Then those same panelists drew the week’s largest crowd of media types to a briefing following the formal session.

The level of interest was not surprising. Like the proverbial train wreck, having industry giants such as Zimmer (Warsaw, Indiana), DePuy Orthopaedics (Raynham, Massachusetts), Biomet (Warsaw, Indiana), Smith & Nephew (London) and Stryker (Kalamazoo, Michigan) all get involved in settlement activities of one sort or another will ratchet up the interest in a hurry (Medical Device Daily, Sept. 28, 2007).

The media attendees, some of whom acknowledge possibly being driven by the mea culpas that emanated from newsrooms when their denizens began shedding an ethics-challenged “freebie” mentality a generation ago, have taken their watchdog responsibilities so much to heart that at least one reporter demanded having all relevant panelist disclosures in hand before briefings even started.

The surgeon attendees had their own reasons for crowding into the first-thing-in-the-morning session, not the least of which might have been wondering how to avoid being painted with the same brush as their brethren who are accused of inappropriate – or at least inappropriately acknowledged – relationships with the companies that supply their hip and knee implants and other “working metal,” as one physician wryly termed it.

Leading roles were played in both sessions by Lewis Morris, deputy inspector general in the Office of the Inspector General of the Department of Health and Human Services (HHS); Christopher White, executive VP and general counsel at the Advanced Medical Technology Association (AdvaMed; Washington); and Howard Young, a partner in the law firm of Sonnenstein, Nath and Rosenthal and a noted expert in fraud and abuse cases.

Morris noted that within the Department of Justice, “you have the Attorney General and what we call Main Justice. Some investigations are driven by Main Justice,” while others are driven by district offices of the Attorney General.

He added that as far as coordination of such activities is concerned, “There are times when there is good, healthy competition between districts and sometimes between districts and Main Justice.”

Fraud-and-abuse cases such as the multiple cases involving the big orthopedic firms tend to be driven by investigators in given regional offices of the Attorney General, with the Philadelphia and Boston offices “historically having driven medical cases,” Morris said.

However, he noted that cases don’t necessarily end up in just those two venues. “For most of the major medical-products manufacturers, [the DoJ] can establish venue in just about every [district].”

Right now, Morris said, the New Jersey district office in Newark “seems to have the medical device field covered.”

Regarding the potential for broader fraud-and-abuse questions, he cautioned that it’s important for companies “to do self-examinations to be on top of these issues.”

Young, a former senior attorney and deputy branch chief with the Office of Counsel to the HHS Office of the Inspector General whose responsibilities included coordinating with the DoJ, state attorneys general and the Centers for Medicare & Medicaid Services on criminal and civil healthcare fraud matters, said there’s also “a healthy level of competition between state attorneys general in prosecuting such cases.”

He cited the “sheer volume” of such cases at both the state and federal levels, saying “there are so many that it’s going to take many years for these cases to move forward.

“There are a lot of ongoing investigations,” Young said. “I think there’s a lot more to come.”

As for the feeling from the company side, he said, “I think there’s still a bit of an unsettled feeling in the industry.”

Morris chimed in with agreement that it’s not just a matter of having to deal with the federal government. “More and more states are getting into this. States now have a growing financial interest [in launching such investigations].”

He noted that those on the prosecutorial side, whether from the Attorney General, Main Justice or HHS Inspector General ranks, are more and more getting into the training of their across-departmental-lines colleagues on these issues.

“We share information in order to boost our resources,” Morris said.

To a reporter’s question whether we’re going to see a situation where these types of cases are “swept under the rug,” both Morris and White gave resounding “No” answers.

And Young termed the level of fraud-and-abuse investigation activity “astounding,” adding: “There’s a lot of change afoot in the industry.”

As for the importance of the issue from the AAOS perspective, outgoing president James Beaty said, “Every member and exhibitor got a letter from me on the issue. We’re doing everything we can to educate our 30,000 members on this.”

He said the academy “has put in place a mechanism to discipline our members. If a member is found to do something that we think is illegal, we think that member should be disciplined.”

From the industry perspective, White said that since the orthopedic company settlements, companies have taken a different stance. While he didn’t use the word “cavalier” to describe earlier positions companies might have taken, he made it clear that the seriousness of the issue is well understood by all companies in the device sector today.

Perhaps that’s because, as Morris noted, “some companies now are two- and three-time losers,” which makes taking the ethically correct stance even more important to those who haven’t yet been charged with wrongdoing.