A suit against Biomet Inc. and Biomet 3i Inc. filed in New York Supreme Court Thursday seeks $10 million in compensation for a former employee who says he was fired for whistleblowing.
Former sales representative Michael Swiss was harassed and eventually fired after bringing up concerns over kickback practices in 2010, the suit claims. He was a territory manager for the Lower Hudson Valley in New York state in Biomet’s Sales and Marketing Department from 2007 to 2011.
Swiss witnessed Biomet’s routine practice of offering promotions, payments and other incentives to physicians, dentists, labs and hospitals to purchase or recommend Biomet products, claims the suit, filed in Ulster County court by Sanford Heisler Kimpel LLP. Many of the customers subsequently sought reimbursement for the products from Medicaid, in violation of state and federal laws, according to information from the law firm.
“Biomet sales representatives were given a budget – in the form of ‘education’ and ‘expense’ (or entertainment) dollars – to spend on their clients, medical providers targeted for Biomet sales,” the filing states. “‘Education’ dollars were a way of directly funneling cash to these providers, while ‘expense’ dollars provided them valuable perks, such as free meals and travel. These funds were used to induce the providers to use Biomet products. It was well-recognized within Biomet that there was a direct correlation between representatives’ spending on their clients and a territory’s sales figures. Ultimately, a representative’s commissions depended on maximizing the impact of Biomet’s kickback schemes. Biomet urged representatives to use these tactics aggressively. The ‘big-money’ rewards for high sellers included higher commissions, cash bonuses and vacation travel. “
Swiss brought his concerns to his regional manager and area director, who responded by threatening to fire him, according to the court filing. He then approached two HR employees and shortly after was placed on probation while Biomet reviewed his sales performance and expense reports. The company never carried out the fraud investigation he requested, the filing states.
He was fired March 25, 2011, following “months of harassment and abuse,” on the grounds of his performance, though the filing says he outperformed many other territory managers and ranked in the top 40 percent for 2010.
“In reality, Biomet retaliated against Mr. Swiss for trying to blow the whistle on alleged Biomet kickback schemes,” the filing states.
“Unfortunately, the reality in this country is that all too often, employees who blow the whistle find themselves facing unlawful termination,” Jennifer Siegel, an attorney in Sanford Heisler’s New York office, said by phone Thursday.
The loss of employment forced Swiss to liquidate his savings, sell his home and move to eastern Pennsylvania, where he works as an hourly retail employee, according to the law firm.
Swiss filed a qui tam action against Biomet in February 2012 under both federal and New York False Claims Act statutes, but chose not to pursue the claims and voluntarily withdrew them May 27, 2015, the filing states.
Thursday’s suit requests a jury trial and seeks compensation of over $10 million, including twice the amount of Swiss’ back pay plus interest; reinstatement to his former position and compensation level; compensation for special damages he sustained as a result of the companies’ conduct, including compensatory damages for emotional distress; litigation costs and reasonable attorneys’ fees; and other relief the court deems proper.
Monica Kendrick, vice president of Zimmer Biomet corporate communications, said in response to the suit, “We are aware of the filing and deny the allegations outlined in the lawsuit. We have no further comment at this time.”
Biomet, now part of Zimmer Biomet following an acquisition by the other Warsaw orthopedic maker, and its subsidiaries have paid millions of dollars in settlements over bribery and kickback charges since 2012.
Biomet reached a $22.9 million settlement in March 2012 after the Securities and Exchange Commission charged it with violating the Foreign Corrupt Practices Act, saying its subsidiaries and agents bribed doctors in Argentina, Brazil and China for almost 10 years to earn business. A deferred prosecution agreement Biomet entered at the time was extended in March 2015 for another year, just days before it was set to expire, so the U.S. Department of Justice could investigate whether Biomet helped bribe government officials in Mexico and Brazil.
And a Parsippany, N.J.-based subsidiary agreed in October 2014 to pay $6.07 million to resolve Justice Department allegations that it violated the False Claims Act by paying kickbacks to encourage use of its bone growth stimulators and by billing federal health care programs for refurbished stimulators.
(Story By The Times Union)
