Exactech: Failing Knee Components and the Cost of a Recall

In the Exactech defective knee settlement, Exactech agreed to pay $8 million to resolve allegations that it knowingly sold prematurely failing knee components that generated false claims to Medicare, Medicaid and the Department of Veterans Affairs. The government based the settlement on the company’s financial condition. The whistleblowers’ complaint describes an earlier financial decision inside Exactech: the chief financial officer allegedly rejected a recall as too costly. For someone who saw the failure reports, the inventory or the response to a surgeon’s complaints, that decision is the heart of the story.

Exactech is a manufacturer of orthopedic implants and surgical instruments based in Gainesville, Florida. The Department of Justice announced the settlement on September 16, 2025. It resolved two qui tam cases, one in Alabama and one in Maryland, involving separate components and separate periods of alleged knowledge.

The Alabama whistleblowers brought experience from inside the manufacturer and its distribution business. Their amended complaint identifies an orthopedic-trained physician who had worked for Exactech and two former sales representatives who became distributorship owners. The Maryland case also came from a physician.

The Finned Tibial Tray Allegations

The finned tibial tray is the metal component of Exactech’s knee replacement system that fits into the patient’s tibia. The government alleged that Exactech knew as early as January 2008 that this component failed prematurely at a higher than acceptable rate, yet continued marketing and selling it for surgeries from January 1, 2008, through December 31, 2018.

The government alleged that Exactech kept supplying components it knew failed prematurely, leaving patients with failing implants and government healthcare programs with the bills.

The complaint gives the failure reports a human scale. A surgeon and a distributor allegedly presented Exactech with 51 patients whose tibial components had loosened and required revision surgery, including an operating-room film in their presentation. According to the whistleblowers, Exactech responded that the surgeon was the only one reporting these failures and blamed his cement technique.

That response matters because the complaint also describes other distributors bringing similar concerns to the company. The allegation was that surgeons heard they were alone while Exactech heard from multiple places. An employee receiving those reports would see a different picture from the surgeon receiving the company’s answer.

The Later Logic and Truliant Polyethylene Allegations

The Logic and Truliant polyethylene component allegation concerns a different part of the knee systems. The government alleged that Exactech knew as early as January 2019 that the polyethylene component in certain systems failed prematurely at a higher than acceptable rate. It nevertheless allegedly marketed and sold those systems for surgeries from January 1, 2019, through February 7, 2022.

Here again, the government said that, because of the known failure rate, the component was not reasonable and necessary for use in surgeries on government beneficiaries.

The government resolved both sets of allegations in the same settlement.

What the Exactech Complaint Adds

The Alabama complaint describes how concerns allegedly moved through engineering, marketing, finance and sales. It places a physician who worked as a senior product manager inside the committee discussing failures, and sales representatives beside surgeons who were considering changing suppliers.

The Proposed Recall Allegedly Met an Inventory Bill

According to the complaint, Exactech formed an investigative committee in early 2008 to examine device failures and possible responses. Engineers, product managers and executives participated. The marketing director proposed recalling the finned tray, removing inventory from the market and replacing it with the company’s Trap Tray.

The whistleblowers alleged that the chief financial officer rejected the proposal:

The complaint says the company had too much finned-tray inventory to absorb the loss, too little replacement inventory and too high a cost to expand replacement production. The objection it describes was a balance-sheet objection to removing the product.

That is why inventory belongs in this case alongside failure reports. The whistleblowers alleged that the company had already discussed a way to remove the component, then rejected it on financial grounds. The patient’s need for a working knee met the company’s concern about the trays it had already made.

The Auditor Allegedly Earned Royalties on the Product

The complaint alleges that Exactech selected a designer of the Optetrak knee system to audit patient outcomes. He received royalties on sales of that system. The whistleblowers described the company’s reason for trusting him with the investigation:

Their criticism went beyond the financial relationship. They alleged that the audit included patients whose original implant came from another manufacturer and whose replacement used an Exactech device. Including those operations enlarged the sample used to assess failures of original Exactech implants. They also alleged that the audit omitted or miscategorized some patients with loose Exactech tibial trays. The physician whistleblower said he recognized failures in the underlying information that the audit had not classified as loose Exactech trays.

Consulting Allegedly Began When a Surgeon Threatened to Leave

The complaint also alleges that Exactech used consulting arrangements to retain surgeons frustrated by device failures. In one account, a surgeon complained about loosening and threatened to stop buying the company’s products. The timing of the consulting relationship supplied the whistleblowers’ point:

The whistleblowers alleged that the surgeon met with representatives to discuss sports medicine, but that no products or meaningful product-development discussions resulted. They identified $5,400 in consulting fees in 2016 and alleged that one purpose of the payments was to induce continued use of devices paid for by federal health care programs.

Their account connects the complaint about the implant, the threatened loss of business, the offer of paid work and the later end of the agreement.

Bankruptcy Set the Settlement’s Terms

The Exactech settlement was based on the company’s financial condition. The Maryland announcement says the U.S. Bankruptcy Court for the District of Delaware approved it as part of the Chapter 11 proceedings.

The settlement came down to what Exactech could afford.

The government’s announcement allocated $7,640,000 to the federal share and $360,000 to the state share, with the states entering separate agreements.

The settlement also provided for separate whistleblower shares from the Alabama and Maryland cases. The Alabama group was allocated about $1.3 million. The Maryland physician received a separate allocation under the same resolution.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

The Earlier Compliance Penalty and Later Refusal

Exactech’s compliance history includes an earlier corporate integrity agreement, a penalty for failing to meet its requirements and a later refusal of compliance oversight.

On June 9, 2014, Exactech paid a $15,000 stipulated penalty under its corporate integrity agreement. The Department of Health and Human Services Office of Inspector General identified failures to screen employees and contractors against government exclusion lists, distribute revised policies, and provide certain business counterparties with its code of conduct and anti-kickback policies.

The Inspector General also lists Exactech as refusing a corporate integrity agreement on May 22, 2025, and places it under heightened scrutiny.

How Exactech’s Implant Forms Reached the Government’s Bill

The Exactech complaint connects knowledge of device failures to particular implants, operations and government claims. Its most useful billing detail is a form that traveled from the operating room to the manufacturer and the hospital’s billing department.

According to the complaint, an Exactech representative brought an inventory of implant sizes to surgery, supplied the selected device and completed a Delivered Goods/Transfer of Inventory form. The form identified the patient, hospital, products, model numbers and serial numbers. It put a particular component into a particular operation.

The representative described getting the hospital employee’s signature after surgery, sending a copy to Exactech and taking paperwork to hospital materials and billing staff. The whistleblowers alleged that the hospital then submitted claims to Medicare or Medicaid. This is how their account reached the bill: the person who supplied the implant also handled the document used to pass its cost into hospital billing.

The complaint follows the paperwork through the sales commission, too. It says the representative obtained purchase-order numbers for completed operations and sent them with corresponding patient information to Exactech. The representative and distributorship then received their commission. The sales records thus supplied another connection between a device, its use and the company’s revenue.

That role fits the way implants reach an operating room. Device representatives may manage inventory and bring sets containing different sizes so a surgeon can select the component needed. In ordinary hospital reimbursement, the implant’s cost is generally included in the payment for the procedure or stay.

The complaint also describes a direct route to the Department of Veterans Affairs. It alleges that Exactech supplied knee devices under delivery orders and requested payment from the department while knowing the finned tray was defective. In that account, the government’s purchase orders and the manufacturer’s payment requests supply the transaction.

For an insider, the records connect different decisions. A failure report or internal audit concerns what the company knew. Inventory discussions concern what it chose to keep supplying. Consulting records concern why a surgeon kept using the product. Implant forms and claims connect that use to government money.

Aesculap Shows the Same Collision of Failures and Sales

Aesculap Implant Systems agreed to a $38.5 million False Claims Act settlement in November 2025 over allegations involving its VEGA knee system and payments to a surgeon. The government alleged that Aesculap knew bone cement did not adhere properly to the implant, continued selling it without disclosing the problem and failed to take steps to record, track or report adverse events.

The same settlement addressed allegedly unlawful consulting payments, international travel and entertainment for a surgeon who had experienced problems with the knee system. The government alleged that the payments were intended to induce him to use and recommend it.

The parallel is the point at which product performance and customer retention meet. In Exactech’s complaint, a surgeon’s threatened departure allegedly prompted paid consulting. In Aesculap’s settlement, the government alleged inducements to a surgeon who had experienced failures. People handling surgeon complaints, consulting work and sales accounts can see connections between those activities.

You Saw the Decision to Keep Selling

If you saw implant failures reach management while sales continued, speak to one of our Whistleblower Experts about the decision to keep selling. We build your strongest medical device whistleblower case with you around the failure reports, commercial decisions and government claims, and bring in medical device fraud whistleblower lawyers who understand that connection. We stay beside you as your account becomes a case pursued on the government’s behalf.