Smith & Nephew to pay out $11 million in lawsuit

Reuters has reported that London-based medical device maker Smith & Nephew has agreed to pay $11.3 million (£6.93 million) to settle allegations that it sold the US government devices it claimed were US-made but actually came from Malaysia.

The settlement was filed Wednesday in Tennessee federal court, ending a whistleblower lawsuit brought in 2008 by a former Smith & Nephew information technology manager, Samuel Cox.

Under US law, whistleblowers are entitled to a share of a successful recovery.

Cox claimed that Smith & Nephew violated the federal Trade Agreements Act, which requires contractors to sell the government products made either in the United States or in countries it has signed agreements with.

In 2007 and 2008, Smith & Nephew sold the Department of Veterans Affairs orthopaedic devices that it had bought from Malaysia-based Straits Orthopaedics while claiming they were made in the United States, according to the lawsuit. Malaysia does not have a trade agreement with the United States.

"Today's settlement sends a clear message to those medical device companies that routinely violate the Trade Agreements Act by misrepresenting the 'Country of Origin' of goods sold under contract to US government agencies," Vincent  McKnight, Sanford Heisler, an attorney for Cox, said in a statement.