Bankrupt Exactech settles case of faulty knee implants for $8M
Orthopedic device manufacturer Exactech has agreed to pay $8 million to resolve allegations it knowingly sold defective knee implants, violating the False Claims Act.
The settlement was announced by the U.S. Department of Justice (DOJ), which backed the claim from a Maryland whistleblower who alleged the company knew its knee replacement devices were prone to failure due to two faulty components—yet Exactech sold them anyway.
Further, reimbursement for the faulty implants was paid by Medicare, Medicaid and the Department of Veterans Affairs (VA), the DOJ claimed.
“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 O. Hayes, U.S. Attorney for the District of Maryland, said in a statement. “We will hold companies accountable who knowingly sell defective devices.”
Although Exactech is not required to admit to liability, the settlement case was focused on a faulty metal tibial tray and a “polyethylene component” used in its Logic and Truliant knee replacement lines that was known to fail at a higher than acceptable rate.
The whistleblower and DOJ alleged that Exactech was aware of the issue with the tibial tray in 2008, but continued to sell them until 2018. As for the breakdown of the polyethylene plastic, that was discovered as early as 2019—though they remained on the market until 2022.
Recall, lawsuits and subsequent bankruptcy
In January 2024, Exactech was warned by the U.S. Food and Drug Administration that insufficient packaging on the knee replacements was leading to the devices being damaged. While Exactech acknowledged the warning, it resisted issuing a recall, finally caving and announcing in March 2024 that it would be recalling multiple lines of its shoulder and knee implants as a result of the manufacturing error.
The notice impacted products used between 2004 and 2021, meaning most of them were already inside patients. By October Exactech had filed for Chapter 11 bankruptcy amid mounting lawsuits from firms representing some 2,600 of them.
The $8 million settlement agreement, announced by the DOJ on Sept. 16, is part of the bankruptcy court proceedings and subsequent restructuring at Exactech. The company recently received approval for its remaining assets to be sold to a private equity investment group made up of multiple firms who agreed to the purchase, which is pending final approval by the court.
This summer Exactech appointed a new CEO and chief medical officer who will lead the newly restructured organization, which will be free of its debts and liabilities stemming from the defective implants.
HealthExec reached out for comment and will update this story with any statement we receive.
Chad is an award-winning writer and editor with over 15 years of experience working in media. He has a decade-long professional background in healthcare, working as a writer and in public relations.