DOJ: Biomet breached DPA
Thursday, June 16, 2016 at 7:18AM
Richard L. Cassin in Argentina, Biomet, Brazil, China, Mexico, Monitors, Zimmer, deferred prosecution agreements

The DOJ said in a court filing this month that Biomet breached a 2012 deferred prosecution agreement "based on conduct in Brazil and Mexico."

A status report filed in federal court in Washington, D.C. on June 6 also cited Biomet’s failure to maintain an effective FCPA compliance program.

Breaches of the DPA could expose Biomet to criminal prosecution for FCPA violations. But in the same court filing, the DOJ said it is talking to the company about a resolution that would avoid a trial.

Biomet entered into a three-year deferred prosecution agreement in March 2012. The DOJ later extended the DPA twice during a federal investigation.

In the March 2012 enforcement action, Biomet paid $22.7 million to settle FCPA-related offenses. That included a criminal fine of $17.3 million to the DOJ and the three-year DPA with a compliance monitor. It also disgorged $5.5 million to the SEC to resolve civil FCPA allegations.

In July 2014, the SEC subpoenaed Biomet for documents relating to "certain alleged improprieties" in the company’s Brazilian and Mexican operations. Biomet had disclosed the allegations to the DOJ and the SEC three months earlier.

In March 2015, the DOJ extended the DPA and the compliance monitor’s appointment for an additional year.

Zimmer bought Indiana-based Biomet last year for about $14 billion. The orthopedic device maker is now known as Zimmer Biomet Holdings Inc.

In March this year, Zimmer Biomet said it agreed to extend the DPA again.

In the court filing this month, the DOJ said its discussions with Biomet to resolve the DPA breaches without a trial are ongoing.

The DOJ said it isn't now seeking any hearings or other relief.

In the 2012 enforcement action, prosecutors said Biomet bribed doctors at government hospitals in Argentina, Brazil, and China from 2000 to 2008. It paid more than $1.5 million and disguised the payments as commissions, royalties, consulting fees, and scientific incentives.

Biomet's March 26, 2012 DPA is here (pdf).

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Here's the full text of the DOJ Status Report filed in USA v. Biomet Inc in the U.S. District Court for the District of Columbia (Case No. 12-cr-80):

The government submits this Status Report in response to the Court’s March 21, 2016 Order requiring the government to file an updated status report on or before June 6, 2016.

1. On March 26, 2012, Biomet, Inc. (“Biomet”), entered into a Deferred Prosecution Agreement (“DPA”) with the government. Pursuant to the terms of the DPA, the government agreed to defer prosecution of Biomet if the company satisfied its obligations under the DPA, including the obligation to implement and maintain a compliance and ethics program designed to prevent and detect violations of the Foreign Corrupt Practices Act, 15 U.S.C. §§ 78dd-1, et seq. (the “FCPA”) and other applicable anti-corruption laws throughout its operations. (DPA, ¶ 7.) The DPA had a three-year term and could be extended for up to one year if the government determined, in its sole discretion, that Biomet had knowingly violated any provisions of the DPA. (Id., ¶ 2.) Biomet also agreed that an independent compliance monitor would review Biomet’s compliance program to determine whether it was reasonably designed and implemented to detect and prevent violations of the anti-corruption laws and was functioning effectively. (Id., Attach. D ¶ 8.) As described in a prior filing in this case (Dkt. #5 at pp. 2-3), the government extended the DPA and the independent compliance monitor’s appointment for one additional year.

2. On March 18, 2016, the government filed a status report with the Court stating that the government was considering whether Biomet had breached the DPA based on conduct in Brazil and Mexico that was disclosed by the company in 2014 and based on Biomet’s failure to implement and maintain a compliance program designed to prevent and detect violations of the FCPA and other anti-corruption laws. The Court ordered that the government file an additional status report on or before June 6, 2016.

3. On April 15, 2016, the government notified Biomet that the government had determined that Biomet had breached the DPA based on the conduct in Mexico and Brazil and based on Biomet’s failure to implement and maintain a compliance program as required by the DPA. Biomet has represented that it is committed to continuing to cooperate, and the government and Biomet have been in discussions to resolve this matter which would obviate the need for a trial. Those discussions are ongoing.

4. At this time, the government does not seek any hearings or any other relief.

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He'll be the keynote speaker at the FCPA Blog NYC Conference 2016.

Article originally appeared on The FCPA Blog (http://www.fcpablog.com/).
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