Dive Brief:

• A former DePuy Synthes sales representative and team lead was arrested this week for allegedly defrauding a Boston area hospital and lying to federal authorities investigating whether he interfered with the hospital’s sterilization processes. 
• Matthew Capobianco, 45, of Winchester, Massachusetts, was indicted on eight counts of wire fraud and one count of making material false statements, according to the U.S. Attorney’s Office in Boston.
• Johnson & Johnson unit DePuy Synthes, in an emailed statement, said all government claims against the company in the matter have been resolved.

Dive Insight:

According to the Department of Justice indictment, Capobianco defrauded the hospital out of hundreds of thousands of dollars’ worth of spine products that he falsely represented as used in surgeries from January 2016 through June 2017. The Boston area hospital was not named in the DOJ’s statement.

To boost his sales numbers and his compensation, Capobianco falsely represented on forms submitted to the hospital’s billing department that more expensive and a greater quantity of DePuy products were used during spine surgeries than was the case, the indictment alleges. The alleged overbilling caused the hospital to overpay DePuy for products that were not used and caused the company, in turn, to pay Capobianco commissions he did not earn.

The indictment also claims that Capobianco instructed a subordinate DePuy sales representative in 2016 to bring DePuy spinal implants into an operating room at the hospital for a surgery, without those implants first being sterilized. The two were alleged to have known that using unsterile implants in a spine surgery could lead to serious infection or death.

Capobianco is also accused of bringing DePuy spinal implants that were not in compliance with the hospital’s sterilization policies into an operating room in May 2017. Concerned about the dangers posed by unsterile implants, hospital employees confiscated the devices to ensure they were not used in a scheduled surgery, and Capobianco was banned from the hospital that afternoon.

In an interview with federal agents that day about the incident and his interference with the hospital’s sterilization processes in the months leading up to it, Capobianco allegedly made false statements.

DePuy Synthes said any allegations of improper billing have been dismissed against the company as part of a civil settlement. The settlement was not an admission of liability, the company said.

“The allegations of a former employee’s conduct outlined in this indictment are contrary to company policy. We are committed to ensuring our employees conduct business in a way that complies with our Credo and with all laws and regulations, and we have extensively cooperated with the government’s investigation related to this indictment,” the company said.

Capobianco was arrested Monday and released on certain conditions after an arraignment in federal court in Boston, the authorities said.

The wire fraud charges carry a sentence of up to 20 years in prison and a minimum fine of $250,000. The charge of false statements carries a sentence of up to five years in prison and minimum fine of $250,000.