The U.S. District Court of the District of New Jersey sentenced the OtisMed Corporation’s (OtisMed) former chief executive officer, Charlie Chi, to 24 months in prison yesterday, followed by 1 year of supervised release, as well as pay a $75,000 fine.
The sentencing was the culmination of a long-term investigation conducted jointly by special agents from the FDA’s Office of Criminal Investigation and from the Department of Health and Human Services’ Office of the Inspector General, and came 6-months after the company agreed to pay more than $80 million to resolve related criminal and civil liability related to charges of medical devices with intent to defraud and mislead. At that same time, Chi pleaded guilty to introducing adulterated medical devices into the marketplace.
The OtisKnee was used by surgeons during total knee arthroplasty, commonly known as knee replacement surgery. OtisMed marketed the OtisKnee cutting guide as a tool to assist surgeons in making accurate bone cuts specific to individual patients’ anatomy based on magnetic resonance imaging (MRI) performed prior to surgery. None of OtisMed’s claims regarding the OtisKnee device were evaluated by the FDA before the company made them in advertisements and promotional material.
“With more than 600,000 knee replacements performed each year, patients rely on FDA to help ensure that the devices are safe and work as intended. When manufacturers ignore FDA requirements, they risk endangering patients’ health and quality of life,” said George M. Karavetsos, director of the FDA’s Office of Criminal Investigations. “We will continue to protect the public health by bringing to justice those who disregard FDA regulations.”
“The defendant betrayed the trust of patients whose doctors were using his unapproved surgical device for a serious medical procedure,” added U.S. Attorney for the District of New Jersey Paul J. Fishman. “With everything else people have to deal with when they are facing surgery, they shouldn’t have to worry whether their doctor is using equipment that has been approved for use. The punishment meted out to Chi and his company is appropriate.”
In the meantime Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division stated that “Yesterday’s sentencing of OtisMed’s CEO ought to send a clear message to others in positions of authority within the medical device and pharmaceutical industries: the Department of Justice will vigorously prosecute not only corporations, but also the individuals at their helm who are responsible for endangering public health and safety in pursuit of profit.”