Exactech will pay $8M to settle lawsuits over defective knee implant parts

Medical device manufacturer Exactech has agreed to pay $8 million to settle allegations that it concealed defects in a popular line of artificial knee implants, which have been blamed for thousands of patient injuries in lawsuits.

The settlement resolves two whistleblower lawsuits alleging the Florida company violated the federal False Claims Act by billing government health care programs such as Medicare for knee replacement parts it knew were defective.

"Patients who need a medical device to enjoy their lives rely on device manufacturers to put patient safety first. When a manufacturer learns that its device is defective, it must promptly and transparently address the problem," Kelly Hayes, U.S. attorney for the District of Maryland, said in announcing the settlement this week.

The Gainesville-based company declared bankruptcy last October, leaving in limbo thousands of injured patients suing the company for compensation. The U.S. Bankruptcy Court for the District of Delaware has approved the whistleblowers’ settlement.

Exactech declined to comment. In making the settlement, the company did not admit liability.

Exactech, which grew over three decades from a mom-and-pop device manufacturer into a global entity, was the subject of a KFF Health News investigation published in October 2023.

Florida lawyer Joseph Saunders, who represents patients suing the company in other lawsuits, said more than 2,500 people alleging injuries have filed claims seeking compensation. Many underwent operations to remove and replace the implants, some within three years of their original surgeries. Many of those cases have been put on hold because of the bankruptcy.

"There are people who are lifelong cripples from this or had multiple surgeries," Saunders said.

So far, patients have received no compensation. Sue Sacker, a New Jersey resident who had two Exactech knee implants replaced at the Hospital for Special Surgery in New York City, said she was "very disappointed" by the settlement deal.

"I'm fuming," she said. "People are suffering, and the government is getting the money. Where are the patients? Who's taking care of us?"

Saunders said that a committee of creditors hopes to pursue TPG, a private equity firm that paid $737 million to acquire Exactech in February 2018. TPG won dismissal of a similar attempt last year, when it successfully argued it did not exercise control over operations at Exactech. TPG declined to comment.

The first whistleblower case was filed in 2018 in federal court in Alabama by Brooks Wallace and Robert Farley, two former Exactech sales agents, and Manuel Fuentes, a former Exactech senior product manager.

They alleged serious defects in the Optetrak total knee replacement systems, which Exactech started selling in 1994. By 2008, the company knew that a component of the implant "failed prematurely at a higher than acceptable rate," but Exactech marketed the implants through December 2018, according to the settlement. Together, the whistleblowers will receive $1,329,360 under a provision of the law that allows private citizens to act on behalf of the government.

In the second whistleblower case, Pasquale Petrera, a Maryland orthopedic surgeon, alleged that as early as January 2019 Exactech knew that a polyethylene part in certain Exactech Logic and Truliant brand knee replacement systems also failed prematurely. The company sold them through early February 2022, when it expanded a recall of the product. The Maryland whistleblower will receive $565,360, according to the settlement amount.

KFF Health News found and reported in 2023 about 400 examples in which Exactech reported adverse events to the government two years or more after learning of them. The reports are supposed to be submitted within 30 days unless a special exemption is granted.

The KFF Health News analysis of more than 300 pending cases in Florida’s Alachua County found that surgeons removed about 200 knee and hip implants after less than seven years, far sooner than the 15 to 20 years these products typically last. The company stressed the durability of its implants in advertising, even suggesting they would likely outlive their human recipients.

In court filings, Exactech steadfastly denied that Optetrak had any defects.