Two Medical Product Companies Pay More Than $1 Million To Resolve False Claims Lawsuit That Alleged They Overbilled Federal Agencies

LOS ANGELES – The publicly traded Stryker Corporation and the privately held Alliant Enterprises have paid the United States a total of $1.05 million to resolve a “whistleblower” lawsuit that alleged a failure to disclose complete information about projected government sales, allowing them to avoid heightened scrutiny of a government contract.

The case was resolved when a federal judge dismissed and unsealed the case on March 13.

The lawsuit alleged that Stryker and Alliant failed to disclose to government negotiators complete pricing information, which resulted in higher costs to government agencies that purchased medical products from the Federal Supply Schedule contract awarded by the Department of Veterans Affairs to Alliant. As a result of the conduct by Stryker and Alliant, the VA and other government agencies allegedly purchased products at inflated prices.

The two companies paid the settlement in December. Stryker paid the United States $911,219, and Alliant paid $151,215.

Stryker Corporation is a Fortune 500 medical technology and equipment company with several divisions, including Stryker Medical, which manufactures medical equipment. Stryker sold certain medical equipment – including critical care hospital beds, medical-surgical hospital beds and stretchers – to government purchasers through the Federal Supply Schedule pursuant to modifications to a contract that the VA had previously awarded to Alliant. The lawsuit alleged that because Alliant was used to sell the Stryker-manufactured products, the defendants provided none of Stryker’s commercial pricing history to the VA for price comparison purposes, and that Alliant understated expected sales of the products, which allegedly allowed the defendants to avoid scrutiny and overcharge the VA.

The lawsuit was filed in United States District Court in Los Angeles in 2008 by a former Stryker employee under the qui tam – or “whistleblower” – provisions of the federal False Claims Act, which allow individuals to bring lawsuits on behalf of the United States and to receive a portion of the proceeds of a settlement or judgment awarded against a defendant.

Stryker and Alliant have resolved this action without admitting any wrongdoing. 

This settlement was reached by the U.S. Attorney’s Office for the Central District of California and the Department of Justice Civil Division’s Commercial Litigation Branch. The matter was investigated by the Department of Veterans Affairs’ Office of Inspector General.