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Laguna Niguel-Based Whistleblower Wins Suit Against Medical Equipment Companies

The companies paid a total of more than $1 million, federal prosecutors announced today. The former employee exposed practices that resulted in higher costs to government agencies.

Two medical equipment companies paid a total of more than $1 million to resolve a whistleblower lawsuit brought by a Laguna Niguel resident. Patch file photo.
Two medical equipment companies paid a total of more than $1 million to resolve a whistleblower lawsuit brought by a Laguna Niguel resident. Patch file photo.

Originally posted at 5:51 p.m. March 24, 2014. Edited to add new information.

Two medical equipment companies paid a total of more than $1 million to resolve a whistleblower lawsuit alleging failure to disclose complete sales information to the government, federal prosecutors announced today.

The suit, brought by Laguna Niguel resident Gary Gustafson, alleged that Stryker Corp. and Alliant Enterprises failed to disclose to government negotiators complete pricing information, which resulted in higher costs to government agencies that purchased medical products from the Federal Supply Schedule contract awarded by the U.S. Department of Veterans Affairs.

Gustafson was a Stryker employee from 1987 to 2007, according to his lawsuit. He continued to consult with the company for another year.

As a result of the conduct by Stryker and Alliant, the VA and other government agencies purchased products at inflated prices, according to the U.S. Attorney's Office.

"Gustafson gained direct, personal and independent knowledge that defendants submitted and continued to submit false and fraudulent claims to the United States," says his lawsuit. 

Prosecutors said that in December, Stryker paid the United States over $900,000 and Alliant paid more than $150,000.

The case was resolved when a federal judge dismissed and unsealed the complaint on March 13.

The lawsuit was filed in federal court in Los Angeles in 2008 by a former Stryker employee under the qui tam -- or whistleblower -- provisions of the federal False Claims Act, which allow individuals to bring lawsuits on behalf of the United States and to receive a portion of the proceeds of a settlement or judgment awarded against a defendant.

Stryker and Alliant resolved the action without admitting any wrongdoing.

--City News Service

Patch Senior Editor Penny Arévalo contributed to this report.

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