Friday, February 3, 2012

Fraud charges dropped on Stryker ex-president Philip

By Julie M. Donnelly, Boston Business Journal

The federal government has dropped fraud charges against former Stryker Biotech president Mark Philip, Philip’s lawyers announced Thursday. Philip received indictments in 2009 and 2011, alleging he was involved in marketing an unapproved mixture of products for strengthening human bone growth.

A related case in federal court in Boston, charging the Hopkinton-based unit of medical device firm Stryker Corp. (NYSE: SYK) with 13 felony fraud charges, was dropped last month. Stryker Biotech agreed to plead guilty to one misdemeanor count of misbranding a medical device, and to pay a $15 million fine. Charges against a sales representative were also dropped.

According to the U.S. Attorney’s Office in Boston, two sales representatives and a regional manager have pleaded guilty to felony charges of misbranding connected with these two cases.

Nonetheless, Edwards Wildman attorneys representing Philip issued a statement celebrating the outcome. “We applaud the government for recognizing that fairness and justice required the case to be dismissed,” said Edwards Wildman attorney Stephen Huggard, in a statement. “It is not easy for the government to acknowledge that charges were perhaps brought in error, and in this case, U.S. Attorney Carmen Ortiz and Chief of the Criminal Division Jim Lang deserve special credit for diving into the facts of the matter and making the hard, difficult decision to dismiss the case.”

Prosecutors said Stryker Biotech made $12.5 million by misbranding and selling the mixture of products to surgeons over a two year period.

The U.S. Attorney’s Office, in an answering statement, attributed the decision to drop the case to “unfavorable pretrial rulings, combined with strategic error in preparing for trial.” The office tallied its health care fraud recoveries over the past decade at more than $10 billion.

Here is the full statement from the U.S. Attorney’s Office:

    For the last decade, criminal and civil prosecutors in this office have been tenacious advocates in the fight against fraud in the health care industry. Our success in this arena is unparalleled, with monetary recoveries, during that time, amounting to more than $10 billion and the criminal convictions of many corporate executives and salespersons in the health care industry. We are proud of this record. Last week, Stryker Biotech pleaded guilty to a misdemeanor and was ordered to pay a $15 million fine for its role in the misbranding of a bone-growth drug. Three sales representatives and one regional manager also pleaded guilty to felony misbranding in this case.

    However, unfavorable pretrial rulings, combined with a strategic error in preparing for trial, led to the dismissal of charges against the individual defendants in the Stryker case. This was a difficult decision but one warranted by a complex confluence of factors. At the end of the day, doing justice meant dismissing the charges, rather than subjecting these individuals to a protracted trial where the government could not put its most effective case before the jury.