Stryker, Federal Prosecutors Reach Deal in Bone Growth Lawsuit

It took more than two years, but Mark Philip finally cleared his name. So did David Ard, William Heppner and Jeffrey Whitaker.

The foursome worked for Stryker Biotech and had been accused by federal prosecutors of promoting the off-label use of two bone-growth products, OP-1 Implant and OP-1 Putty. But law enforcement officials dropped 13 charges against the company and all allegations against the men after the Hopkinton, Mass.-based firm pleaded guilty to a single misdemeanor charge and paid a $15 million fine. Stryker took a fourth-quarter charge of three cents per share to pay for its settlement with the U.S. Attorney’s Office for the District of Massachusetts.

“The government had an opportunity to review some documents that had previously been withheld as privileged,” Assistant U.S. Attorney Jeremy M. Sternberg told U.S. District Court Judge George O’Toole Jr. during a Feb. 2 pre-trial hearing. “After reviewing the documents, it’s the government’s plan to file a motion to dismiss the case against Mr. Philip.”

The decision to drop most charges against Stryker Biotech and all accusations against Philip and his colleagues is a surprising one, considering the U.S. Attorney’s Office in Massachusetts has aggressively fought against healthcare fraud and illegal activity in the medical device sector in recent years. Philip, president of Stryker Biotech from 2004 until 2008, was charged with wire fraud and conspiracy and faced a maximum 20-year prison term as well as deportation upon conviction (though he lives near Boston, Philip is a citizen of the United Kingdom).

The government’s about-face in the case, however, wasn’t all that shocking to Philip’s attorney, Stephen G. Huggard of Edwards Wildman Palmer LLP. He attributed the decision by prosecutors to drop charges against his client to tangible proof that Philip “acted in good faith.” He would not divulge the precise nature of that proof though, telling Bloomberg only that he “showed some…defense.”

In an official statement, Huggard applauded the government for “recognizing that fairness and justice required the case to be dismissed. 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 deserves special credit for diving into the facts of the matter and making the hard, difficult decision to dismiss the case.”

For quite some time, it seemed as if the government had a solid case against Philip, Ard, a former regional sales manager from California; Heppner, a former national salesman from Illinois; and Whitaker, a former regional manager from North Carolina. The group was charged in a 2009 indictment with conspiring to defraud surgeons into combining the company’s OP-1 Implant and OP-1 Putty with a synthetic bone filler called Calstrux. The U.S. Food and Drug Administration (FDA) had approved the OP-1 line (under its humanitarian device exemption provision) as well as Calstrux, but the agency never authorized the use of both products together.

Some patients who were given a mix of the OP-1 and Calstrux products suffered serious side effects and required more surgery, law enforcement officials alleged. “That mixture was never studied clinically,” Assistant U.S. Attorney Susan Winkler told the jury in her opening statement when the sales representatives’ trial began last month in a Boston courtroom. “They did not know if it worked. They did not know if it was safe, and they marketed it to doctors anyway.”

They marketed it to doctors in unique ways, too, promoting “recipes” to surgeons and medical technicians that featured moldable OP-1/Calstrux “cigars, Tootsie Rolls or Vienna sausages,” Winkler contended. A small jar of OP-1, she claimed, cost $5,000.

But Brien T. O’Connor, attorney for Stryker Biotech, painted a different picture of the product and the company for jurors. He argued that doctors were attracted to the OP-1/Calstrux mix due to its efficacy and noted that prosecutors had no proof the bone mixture caused reactions in a relatively small number of patients. Stryker Biotech, according to the indictment, was charged with misbranding.

“The evidence will show this is a misguided prosecution and a gross injustice to Stryker Biotech,” O’Connor countered to jurors. The attorney said he was prepared to call as witnesses surgeons who used the OP-1 products on U.S. soldiers and top athletes.