What Medical Device Companies Need to Know About DOJ Enforcement

Medical device companies remain in the Department of Justice’s crosshairs. False Claims Act recoveries totaled $6.8 billion in fiscal year 2025, with more than 83% related to health-care matters. Nearly one-third of those recoveries came from non-intervened actions, underscoring the growing appetite of qui tam relators to litigate independently.

Medical device companies may face DOJ particular enforcement scrutiny for several reasons. First, device companies often maintain close relationships with health-care professionals, or HCPs, who may serve as direct purchasers, surgical partners during procedures, and participants in product design improvements. These touchpoints create inherent anti-kickback statute risks.

Second, medical devices often undergo design changes after receiving Food and Drug Administration clearance. This process creates ongoing regulatory submission decisions and a dynamic manufacturing landscape.

Finally, the device industry is less consolidated, meaning smaller companies—with leaner teams and compliance budgets—are key market participants.

Device companies can create a competitive advantage by leveraging data to strengthen compliance programs and by ensuring effective oversight of quality and regulatory reporting requirements.

Recent Enforcement Actions

DOJ continues to scrutinize device companies’ financial relationships with HCPs, including whether those relationships are inappropriately influencing clinical decision-making. Product quality lapses, and false or misleading promotion activities also remain in focus.

In a recent example, ExThera Medical Corporation entered into a three-year deferred prosecution agreement with DOJ and agreed to pay a criminal penalty of $750,000 in connection with charges that the company failed to file adverse event reports, related to a blood filtration device used on cancer patients, with the intent to defraud or mislead the FDA.

The deferred prosecution agreement requires ExThera to provide ongoing cooperation with and disclosure to DOJ; implement a compliance and ethics program to prevent violations of the Federal Food, Drug, and Cosmetic Act’s adverse event reporting requirements; and report to DOJ on remediation and implementation of these measures.

DOJ also secured a felony guilty plea from a former ExThera executive following allegations that the executive concealed reportable adverse events from the FDA, including the deaths of two patients treated with the blood filtration device.

In Marien & McGee v. Aesculap, Inc., Aesculap agreed to pay $38.5 million to resolve civil FCA and anti-kickback statute allegations that it sold materially defective knee replacement devices and paid unlawful remuneration to induce their use. DOJ alleged that despite knowing about the problems with its knee replacement devices, the company didn’t alert HCPs, file required adverse event reports with FDA, or otherwise take steps to remedy the problem, causing HCPs to submit false claims for unnecessary services.

DOJ further alleged that the company paid kickbacks to an orthopedic surgeon—including consulting fees, international travel, and entertainment—to induce him to use and recommend its implant.

Aesculap entered into a non-prosecution agreement to resolve alleged criminal violations of the Federal Food, Drug, and Cosmetic Act related to marketing two medical devices without required FDA approval. DOJ secured a guilty plea from a former company employee, who was responsible for guiding the two devices through the FDA process but failed to submit required materials and forged FDA approval documents.

In Jain v. Diopsys, Inc., Diopsys agreed to pay up to $14.25 million to resolve civil FCA allegations that it knowingly caused providers to bill Medicare and Medicaid for medically unnecessary vision tests. Prosecutors alleged that Diopsys promoted the use of a device for vision testing that wasn’t cleared by FDA for that use, causing providers to bill insurance for medically unnecessary tests that were conducted using a device that wasn’t FDA approved.

Heightened Scrutiny Ahead

The July 2025 renewal of the DOJ-HHS FCA Working Group signals intensified enforcement coordination and continued focus on the health-care industry, including the medical device sector. The working group is leveraging data and other information to identify new leads. Its priorities include kickbacks related to medical devices, materially defective devices that impact patient safety, and drug and device pricing.

Deputy Assistant Attorney General Brenna Jenny, the DOJ official leading FCA enforcement, has warned businesses that “your next whistleblower could be your data.”

Companies should monitor FDA inspection activities, which can result in referrals to DOJ if significant quality problems are uncovered. FDA is working to increase its inspectional capacity, and inspection rates are climbing after years of decline. Additionally, the new Quality Management System Regulation, effective Feb. 2, requires companies to provide FDA inspectors access to audit reports, giving regulators a direct window into issues identified through audits.

Risk Mitigation Strategies

Given the enforcement climate, companies should prioritize building compliance programs focused on risk assessment and risk management. Training that includes real-world scenarios and compliance functions that evolve alongside the business can prevent small problems from becoming big ones.

Companies should regularly evaluate key HCP relationships by auditing payments to HCPs, monitoring discount and rebate arrangements, and tracking communications between sales representatives and HCPs. Conducting compliance program risk assessments at regular intervals allows companies to ensure their compliance function is addressing current risks. These efforts may also help demonstrate corporate control and good-faith compliance efforts for companies facing an enforcement matter.

Finally, companies should maintain effective processes to respond promptly to patient-safety issues that may arise as a result of product quality problems, as these often raise the profile of a case in the eyes of prosecutors. A response to a product-quality or patient-safety issue will likely be scrutinized, and companies that demonstrate sound decision-making and timely, transparent communications with regulators will be well-positioned to withstand this scrutiny. Conversely, missed deadlines for adverse event reports and recalls can provide straightforward evidence of violations if they have been missed.

Outlook

In an environment marked by record-setting FCA recoveries, an emboldened qui tam bar, and strong coordination among regulators, medical device manufacturers can create a competitive advantage by treating compliance as an evolving, iterative exercise.

Enforcement trends can serve as a strategic roadmap for prioritizing areas of focus. Companies that design their compliance programs to address these key enforcement issues will be able to separate themselves in the marketplace. Demonstrating a proactive, documented commitment to compliance and patient welfare is helpful not only for avoiding liability, but also for preserving corporate trust, protecting leadership and boards, and sustaining long-term growth.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.

Author Information

Jennifer Bragg is a partner at Latham & Watkins and a member of the Healthcare & Life Sciences Industry Group and White Collar Defense & Investigations Practice.

David Tolley is a partner at Latham & Watkins, Chair of the Boston Litigation & Trial Department, and a member of the White Collar Defense & Investigations Practice.

Shannon Mukerji is an associate at Latham & Watkins and a member of the White Collar Defense & Investigations Practice.

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