Former OtisMed Corp., CEO Charlie Chi, a subsidiary of Stryker Corp., was sentenced to two years in prison for distributing knee replacement surgery guides without Food and Drug Administration (FDA) approval.
Stryker Corp. purchased OtisMed Corp. in 2009. The former CEO plead guilty to distributing the devices despite the FDA’s rejection of the company’s application for marketing clearance. Mr. Chi will also face a year of supervised release and a $75,000 fine, all for distributing the OtisKnee cutting guide after the FDA denied its 510(k) application.
A federal judge has fined the company $34.4 million and ordered $5 million in criminal forfeiture. OtisMed has also already agreed to pay $41 million in a separate but related civil settlement. As part of that settlement, OtisMed was excluded from participating in all federal healthcare programs for a period of 20 years and Stryker will work with government officials to ensure its other devices are in compliance.