The Naples, Florida based company Arthrex has agreed to a $16 million settlement with the United States government. The settlement follows allegations that Arthrex paid above-normal "royalties" to a Colorado doctor in exchange for that doctor's recommendation of Arthrex products in surgical and other procedures.
The company, one of the largest employers in southwest Florida, paid Dr. Peter Millett of Colorado millions of dollars during the period in question. The settlement agreement states that these payments began only after the doctor had threatened to refer business to a direct competitor of Arthrex. While royalty payments are not unheard of in the medical services and products fields, the US asserted that the nature and amount of payments were unusual.
The lawsuit originated from a whistleblower complaint from a former sales representative in a northeastern office. In accordance with current statutes, the whistleblower is entitled to receive $2.5 million themselves.
The statutes in question reference false claims made to Medicare, though the settlement makes no mention of these alleged false claims in detail. Dr. Millett himself was not charged in connection with this settlement nor does the doctor appear to be accused of any wrongdoing by either party.
Arthrex is a privately held institution and does not disclose detailed financial records, so it is impossible to say how significant the settlement is for certain. That said, given the company has sufficient liquidity to pay individual doctors millions of dollars, it is safe to say the cost of the settlement will not threaten the company's financial health.