Stryker Biotech Responds to Government Lawsuit Regarding Bone Growth Products

Calling it a threat that “has the potential to swallow attorney-client privilege entirely,” lawyers for former Stryker Biotech chief Mark Philip have hit back at federal prosecutors in criminal case alleging illegal promotion of bone sealants .

The defendants – Stryker Corp. (NYSE:SYK) Biotech branch based in Hopkinton, Mass. Former President Philip, National Sales Manager William Heppner and Regional Sales Managers David Ard and Jeff Whitaker – are charged by the United States Department of Justice of ‘conspiring to promote the improper use of a pair of bone growth products and lying to the Food & Drug Administration. Prosecutors blasted Philips and three other executives in legal cases late last year for opposing attempts by the defendants to have 12 of the 16 charges dismissed.

Today, Philips and the others are fighting back, accusing the government of going too far in its indictment and failing to substantiate most of its charges. Prosecutors added a charge not included in the indictment accusing Stryker and Philip of “seeded Stryker Biotech files with false legal advice,” according to court documents.

Philip argued that the document was privileged communication with an outside lawyer and therefore outside the confines of the trial.

“The government hardly explain because of its overbreadth in this case. The potential consequences of this case are enormous, ”according to the documents. “The government seeks to criminalize communications with a lawyer without showing that these communications should be disclosed to the government. This has the potential to swallow solicitor-client privilege completely.

Further, Philip argued, the government fails to prove that Philip and Stryker had a duty to disclose the number of patients treated with OP-1 sealant before its 2008 annual report, due in April of that year (after the period covered by the trial, October 2007 to February 2008).

“Even though the indictment accuses Philip of concealing a material fact … the government does not allege in the indictment, or demonstrate in its opposition, any duty on the part of Philip or Stryker Biotech during the relevant period, “according to the documents. .

Under the terms of the FDA humanitarian device exemption for sealant, no more than 4,000 units per year were allowed to enter the market. The FDA never requested additional compliance records, argued Philip, adding that the government’s opposition argument was “muddled.”

“Irreconcilable statements in government opposition highlight its own confusion over the actual charge,” according to the documents, which claimed the prosecutors’ cover-up charge was in fact a misrepresentation charge.

“The government cannot have it both ways. As the government concedes, Count 16 lays a cover-up charge, not a misrepresentation charge, ”the documents said. The opposition, however, not only relies on the new, uncharged theory that ‘seeding Stryker Biotech’s records with false legal advice’ was a violation, but inexplicably seeks support in case law that supports a charge of misrepresentation, not a cover-up charge The government is only obscuring the matter.

And because prosecutors did not charge Philip or Stryker with tampering with or concealing FDA records, a charge of complicity should also be dismissed, Philip argued.

“Philip is not claiming that a false statement was made. There was no false statement made in the first place, ”according to the documents. “More specifically, the government did not correctly allege that a crime had been committed. “

In a separate joint filing, the defendants argued that 10 other counts in the case should be dismissed for want of venue. Charges of wire fraud (on emails allegedly sent as part of the alleged scheme) should be dismissed as the emails “simply bounced off a Massachusetts-based computer server while in transit,” the documents say court cases filed by defendants last year. Their most recent filing argues that the charges are unconstitutional.

“The government says the location in the District of Massachusetts is constitutionally cleared for these criminal counts, because on their journey into cyberspace, the emails the charges come from instantly passed through a electronic server located in a storage room in Hopkinton, Mass. “, According to the file. “The government’s remarkable argument finds no support in case law and flouts both the text and the principles of the Constitution.

That’s because the alleged acts detailed in the charges – sending and receiving the emails – were not committed in Bay State, the defendants argued.

“The Constitution specifies – not once, but twice – that a criminal prosecution can only be initiated in a place where the alleged offense was “committed” “, according to the file.

The lawsuit began in 2009 with an indictment charging the defendants with a scheme to promote the combined use of a pair of separate bone healing products, each with a restricted and interim HDE by the FDA. The combination of treatments and devices – the OP-1 implant, OP-1 sealant and Calstrux bone void filler – has caused adverse effects in patients ranging from minor irritations to infections requiring surgery. feedback. The indictment also accuses Stryker and Philip of lying to the FDA about the number of patients treated with OP-1 Putty each year.

Last year, federal prosecutors refused to produce evidence that the defendants claimed they could exonerate them from the charges, later tearing up the defendants’ arguments that 12 of the 16 charges should be dismissed.

In August 2010, Stryker Biotech agreed to pay $ 1.35 million to settle with Massachusetts Attorney General Martha Coakley for alleged marketing fraud and bone growth product fraud. last month the company sought to put such misfortunes in the past, selling the OP-1 line to Olympus Corp. (OTC:OCPNY) for $ 60 million.

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