Biomet, Inc. ("Biomet") was incorporated in Indiana with its principal place of business in Warsaw, Indiana and manufactured and sold orthopedic medical devices worldwide. Until September 25, 2007, it issued and maintained a class of publicly traded securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934. In June 2015, Biomet was acquired by Zimmer Holdings, Inc. and the combined companies were renamed Zimmer Biomet Holdings, Inc. Zimmer Biomet's shares were registered with the SEC and traded on the New York Stock Exchange and the SIX Swiss Exchange.
Biomet Argentina SA ("Biomet Argentina"), a wholly-owned subsidiary of Biomet, was an Argentine corporation through which Biomet conducted business in Argentina. Biomet International Corporation ("Biomet International"), a wholly-owned subsidiary of Biomet, was a Delaware corporation through which Biomet sold products into Brazil. Biomet China, a wholly-owned subsidiary of Biomet, was a Chinese corporation through which Biomet sold products into China. Scandimed AB ("Scandimed"), a wholly owned-subsidiary of Biomet, was a Swedish corporation through which Biomet sold products into China and elsewhere.
From 2000 to 2008, defendant Biomet, Biomet Argentina, Biomet International, Scandimed, and Biomet China, and their related subsidiaries and employees, authorized the payment of at least $1.5 million to publicly employed health care providers to induce the purchase of Biomet products. These payments included approximately $436,000 in cash incentives paid to Argentine health care providers, approximately $1.1 million in case incentives to Brazilian health care providers, and an undisclosed amount of payments made to Chinese health care providers. In China, Biomet also paid for non-business related travel for several surgeons.
On March 26, 2012, the DOJ filed a five count Information in the District of Columbia against Biomet alleging conspiracy to violate the anti-bribery and books & records provisions of the FCPA, direct violations of the anti-bribery provisions of the FCPA, aiding and abetting violations of the anti-bribery provisions of the FCPA and knowing violations of the books & records and internal controls provisions of the FCPA. On the same date, Biomet entered into a Deferred Prosecution Agreement with the DOJ. Under the terms of the agreement, Biomet acknowledged and accepted responsibility for the conduct alleged in the Information and agreed to pay a fine of $17.28 million, to continue to implement enhanced anti-corruption policies and procedures, and to hire an independent monitor for a term of 18 months. The fine represented a 20 percent reduction off the bottom of the sentencing guidelines fine range, which the DOJ agreed was appropriate given Biomet's extensive internal investigation, the nature and extent of Biornet's cooperation in this matter, Biomet's cooperation in the DOJ's investigation of other companies pursuant to 8C4.1, and Biomet's extraordinary remediation.
In a related action, Biomet entered into a Consent Agreement with the SEC. Under the terms of the agreement, Biomet niether admitted nor denied the conduct alleged in the Complaint but consented to entry of final judgment in the matter. On March 27, 2012, the court entered final judgment against Biomet. The court enjoined the company from future violations of the FCPA, required it to disgorge $4,432,998, representing profits gained as a result of the conduct alleged in the Complaint, plus prejudgment interest of $1,142,733, for a total of $5,575,731, and incorporated the terms of the Consent Agreement which required the implementation of enhanced compliance programs as well as the hiring of an independent monitor.
On March 13, 2015, the DOJ informed Biomet that the DPA and the independent compliance monitor’s appointment have been extended for an additional year due to Biomet's discovery of additional potential improprieties regarding its operations in Brazil and Mexico, including alleged improprieties that predated the entry of the DPA. In March 25, 2016, the company announced that the DOJ would be extending the DPA past the scheduled March 26 ending date.
On January 12, 2017, the DOJ filed a superseding information against Biomet's successor, Zimmer Biomet Holdings, Inc., alleging violations of the internal controls provisions of the FCPA. The DOJ filed the superseding information in light of Biomet's (and subsequently Zimmer Biomet's) failure to adhere to the requirements of the DPA. According to the superseding information, from about 2008 to 2013, Biomet made unlawful payments to Mexican customs officials to facilitate the importation of dental products into Mexico. Additionally, despite telling the government that it would stop using a Brazilian distributor implicated in the 2012 enforcement actions, Biomet nevertheless continued using the distributor, and due to improper recording of those transactions, Biomet could not determine if the distributor had continued to make improper payments to Brazilian officials. On the same date that the superseding information was filed, Zimmer Biomet entered into a Deferred Prosecution Agreement with the DOJ with a term of three years. Under the terms of the DPA, Zimmer Biomet accepted responsibility for the misconduct detailed in the superseding information, agreed to pay a criminal monetary penalty of $17,460,300, plus disgorgement and prejudgment interest of $6,522,805, and to hire an indpendent compliance monitor to report to the DOJ for three years on the company's anti-corruption compliance.
In a related action on January 12, 2017, the DOJ filed a single count information in the District of Columbia against JERDS Luxembourg Holding S.ar.l., a Biomet subsidiary, alleging violations of the books and records provisions of the FCPA. On the same date, JERDS entered into a plea agreement with the DOJ and agreed to plead guilty to the books and records violation. Though the U.S. Sentencing Guidelines stipulated a fine between $2.2 and 4.5 million, the DOJ agreed not impose any monetary penalty against JERDS in light of the $17.5 million penalty assessed in the related DPA with Zimmer Biomet.
In a related administrative proceeding initiated on January 12, 2017, the SEC ordered Biomet to cease and desist violations of the FCPA, to pay a civil penalty of $6.5 million plus disgorgement and prejudgment interest of $6,522,805, and to hire an independent monitor to report on the company's anti-corruption compliance for a term of three years.
