Orthofix International N.V., a Texas-based medical device company, has settled FCPA charges stemming from a Brazilian subsidiary's use of commercial representatives and distributors to bribe doctors at state-owned hospitals. In the SEC order, Orthofix agreed to pay $6.25 million and retain an independent consultant, while the company and four former executives will also pay additional penalties for accounting violations. Unlike Orthofix's previous FCPA settlement in 2012, there will be no accompanying DOJ enforcement action.
In the article "Repeat FCPA Offender Orthofix Settles Brazilian Bribery Charges with the SEC", RK&O partner Audrey Ingram discussed the Orthofix settlement and compared it to that of Biomet, another life sciences firm facing a second FCPA enforcement action in five years. She noted that "both companies entered into DPAs in 2012. Both companies self-reported potential new FCPA violations under the terms of their DPAs, indicating that both companies had failed to implement sufficient remedial steps to prevent the repeat violations.” But that's where the similarities ended as Biomet had to resolve parallel DOJ and SEC actions and also agree to a three-year compliance monitor, while Orthofix avoided a DOJ resolution and was only required to engage a compliance consultant for one year. “Although arguably timelier remediation could have avoided a second investigation [for Orthofix], it is clear that Orthofix’s significant efforts were a critical factor in how the matter was resolved,” Ingram said.
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