NEWARK, N.J. — In a rare move, the former CEO of OtisMed received a two-year prison sentence for his part in the scheme to sell adulterated knee replacement parts.
The U.S. District Court of the District of New Jersey sentenced Charlie Chi to two years in prison, one year of supervised release, and a fine of $75,000. This is in addition to the company itself paying more than $80 million in civil and criminal fines for its scheme to sell adulterated devices to hospitals and doctors that were then used in knee implant surgeries.
This scheme occurred between May 2006 and September 2009 when the company sold more than 18,000 knee devices. It was only in 2008 that the company sought pre-market clearance from the FDA. Despite this fact, the company told doctors, hospitals, and other customers that its products were exempted by the FDA from such pre-market requirements. In September 2009, the FDA informed the company that it failed to show its products were safe and effective and was denied its request for clearance. Again, despite this denial, the company proceeded with its shipments of knee implant surgery guides and cutting tools to surgeons across the country. The decision to ship the order after the FDA’s denial was made by Charlie Chi himself and against the decisions of this board.
The CEO defended his actions by claiming he did not want to leave any patients hanging that were scheduled for knee implant surgery. The shipments were done clandestinely at off-site locations using the CEO’s personal account. Furthermore, the documents were backdated so as to hide the shipment date. This wanton disregard for medical device safety procedures and outright lies led to unsafe medical products being used by surgeons and on unsuspecting patients. It is unclear what kind of safety risks the company’s knee implant devices caused – what we know is that the FDA did not grant clearance to sell the products. Considering how many unsafe products are on the market with FDA approval, the bar is arguably rather low, so this is very worrisome.
If you or a loved one has undergone a knee implant surgery and OtisMed products were used, you may be at risk.
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