Stryker Alliant: Projected Government Sales and Contract Review

In the Stryker Alliant government sales disclosure settlement, Stryker Corporation and Alliant Enterprises paid the United States more than $1 million to resolve allegations that incomplete pricing and projected-sales disclosures helped them avoid scrutiny of a government contract. The equipment included hospital beds and stretchers. The lawsuit alleged that government negotiators never received Stryker’s commercial pricing history and that Alliant understated the sales it expected. For someone who knows the prices and projections inside a medical equipment business, that is a recognizable gap between what the seller knows and what the buyer gets to see.

A former Stryker employee brought the qui tam case under the False Claims Act in 2008. The Justice Department’s March 24, 2014 announcement described alleged overcharging of the Department of Veterans Affairs and other federal agencies buying through Alliant’s Federal Supply Schedule contract.

What the Government Sales Disclosure Allegedly Hid

The lawsuit alleged that selling Stryker equipment through Alliant meant Veterans Affairs received none of the manufacturer’s commercial pricing history for price comparison. Alliant held a contract the Department of Veterans Affairs had already awarded. Modifications to that contract allowed Stryker to sell its equipment to government purchasers through the Federal Supply Schedule.

Stryker Medical manufactured the equipment, including critical care hospital beds, medical-surgical hospital beds and stretchers. Alliant was the company with the government contract.

The expected sales figure supplied another part of the alleged scheme. Alliant allegedly understated how much of the equipment it expected to sell. The lawsuit connected that understatement to avoiding closer scrutiny and overcharging Veterans Affairs. The pricing history and the sales projection concerned different questions: what the equipment sold for elsewhere, and how much business the government contract was expected to produce.

Why the Contract Review Mattered

The lawsuit alleged that the incomplete pricing information left Veterans Affairs and other federal agencies paying inflated prices for beds, stretchers and other equipment. The alleged overcharge began before the purchase, with what the buyer was allowed to compare.

The purchasing chain ran directly from Stryker’s equipment through Alliant’s schedule contract to federal agencies.

Medtronic’s country-of-origin settlement, announced in April 2015, concerned allegedly false country-of-origin representations to Veterans Affairs and the Department of Defense, another example of alleged misrepresentations to government equipment buyers.

What the Settlement Resolved

The Justice Department reported that Stryker paid $911,219 and Alliant paid $151,215.

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

What a Medical Device Insider Would Recognize

Someone who knows the manufacturer’s commercial prices and the seller’s government sales forecast can see both sides of a disclosure gap. A sales or contracts employee may understand what a forecast includes, which products it covers and how it compares with the business the company expects. That context gives the figures meaning when we examine what the government was told.

The 2020 Journal of Forensic and Investigative Accounting paper A Forensic Accountant’s Guide to the Most Potent Federal Laws Used Against Healthcare Fraud identifies two advantages of qui tam enforcement: bringing inside information about fraud to light and adding knowledgeable whistleblowers’ resources to the government’s. That is a useful way to understand the former employee’s role here. The person inside the business may be able to explain the commercial information behind a contract submission, including information the buyer never received.

For a contract-pricing concern, we examine how the commercial prices and sales expectations known inside the business compare with the information given to the government. We connect that account to the contract decisions and purchases it affected.

The Price on Paper and the Price Agreed

In the separate Coloplast case, the whistleblowers’ complaint alleged that rebates or chargebacks reduced inflated invoice prices to the agreed prices while suppliers obtained overpayments from Medi-Cal.

You Know the Numbers Behind the Contract

If you know how a medical equipment company’s prices or sales projections changed before they reached a government buyer, speak to one of our whistleblower experts about how the government was overcharged. We build your strongest case with you, bring in medical device whistleblower lawyers who understand federal procurement, and stay beside you through the pursuit of a recovery.