ArthoCare Inks Deal With Justice, Cooperates Against Former Execs
This article was originally published in The Gray Sheet
The company will pay $30 million, establish a compliance program and cooperate on prosecutions of former executives as part of its resolution of fraud allegations with the Department of Justice. Penalties for ArthroCare were reduced for “extraordinary” cooperation with the feds.
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The former top leaders of ArthroCare have been convicted for working in cahoots with distributors to overstate ArthroCare’s earnings. Both face significant prison time for their roles in the scam, according to the Department of Justice.
If completed, Smith & Nephew’s acquisition of ArthroCare would help it diversify into the ENT market, but the deal may not get done as analysts speculate that competitors Stryker and J&J could step in with counteroffers. The interest surrounding ArthroCare emphasizes the pressures being put on large joint makers to find new ways of making money in orthopedics.
S&N highlighted complements between ArthroCare’s Coblation platform for resection procedures and S&N’s mechanical resection blade, among other synergies. The deal comes soon after ArthroCare settled a fraud investigation with the Department of Justice.