The Medical Technology Blog

Today on the Medical Technology Blog we have some Orthopaedic Business News, please read on…

Wright Medical Technology’s President and CEO, Gary D Henley, has resigned from his positions and as a Director of the company. Henley had served as President and CEO and as a Director since 2006. He tendered his resignation prior to a Board meeting called to discuss management’s oversight of the company’s ongoing compliance programme. The Board accepted Henley’s resignation but considered it to be without “good reason” under the terms of his employment agreement, and he therefore is not entitled to severance. In the interim, the Board of Directors has appointed its current Chairman, David D Stevens, as President and CEO with immediate effect. Stevens remains Chairman of the Board.

In addition, the Board has terminated Frank S Bono’s employment, the company’s Senior Vice President and CTO, for allegedly failing to exhibit appropriate regard for the company’s ongoing compliance programme. The company stated that these leadership changes are not related to its operational performance, financial condition or financial reporting. Wright’s Board of Directors has formed a committee comprised of Directors Stevens, Robert J Quillinan, Lawrence W Hamilton and John L Miclot to undertake a search for a permanent CEO. Stevens has asked not to be considered for the permanent CEO position but will serve as interim CEO until the selection process is completed.

In keeping with other orthopaedic companies at the time, Wright signed a deferred prosecution agreement (DPA) with the US Attorney’s Office (USAO) for the District of New Jersey and a civil settlement agreement (CSA) in September 2009. These agreements resolved a USAO investigation into Wright’s consulting arrangements with orthopaedic surgeons relating to its hip and knee products in the US.

Under the DPA, the USAO agreed not to prosecute the company in connection with the matter if Wright satisfies its obligations during the 12-month term of the DPA.  As part of the CSA, the company also shelled out  US$7.9 million to settle civil and administrative claims and entered into a five-year corporate integrity agreement with the Office of the Inspector General of the US Department of Health and Human Services. An independent monitor was also appointed to review and evaluate the company’s compliance with its obligations. So the departure of its top man, and without a pay-off, will come as a worry for Wright’s shareholders, who must be thinking what is going on at the fast growing business. Certainly the departure will raise eyebrows with the USAO and other regulatory bodies amidst concerns that the company may have failed to stick to its commitments.

It’s not the first time the company’s management abilities has been questioned either. The company made a complete mess over its planned closure of a plant in Toulon, France, in November 2010. After failing to convince the court that there was an economic justification for the dismissal of its employees, Wright was forced to pay at least US$.4.5 million to settle that dispute. Could this collectively throw open the door to opportunistic predators interested in the company’s extremity, hip and knee repair and reconstruction assets? Certainly, the company’s management team has never appeared to be so weak and out of its depth.



Espicom Business Intelligence

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Filed under: Company News

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