Document:

exv10w1

Exhibit 10.1

SETTLEMENT AGREEMENT

I. PARTIES

     This Settlement Agreement (“Agreement”) is entered into among the United States of
America, acting through the United States Department of Justice and on behalf of the
Office of Inspector General (“HHS-OIG”) of the Department of Health and Human Services
(“HHS”) (collectively the “United States”); and Wright Medical Technology, Inc.
(“Wright”), through their authorized representatives.

II. PREAMBLE

     As a preamble to this Agreement, the Parties agree to the following:

     A. Wright is a Delaware Corporation headquartered in Arlington, Tennessee that
manufactures, sells and distributes orthopaedic medical devices in the United States.

     B. Wright has executed contemporaneously with this Agreement a Deferred
Prosecution Agreement (“DPA”) with the United States Attorney’s Office for the District of New
Jersey.

     C. The United States contends that Wright caused to be submitted improper claims for
payment to the Medicare Program (“Medicare”), Title XVIII of the Social Security Act, 42
U.S.C. §§ 1395-1395kkk-1.

     D. The United States contends that it has certain civil claims, against Wright, as
specified in Section III, Paragraph 2, below, for engaging in the following conduct during
the period from January 1, 2002 to December 31, 2007 (hereinafter the “Covered Conduct”):

     Wright used, and conspired to use, various forms of financial arrangements to induce
orthopaedic surgeons to cause providers to use Wright’s hip and knee joint
replacement implants

Settlement Agreement Between the United States

of America and Wright Medical Technology, Inc.

 

 

in order to maintain and increase Wright’s market share. These financial arrangements
included, but were not limited to fee-for-service contracts, fixed fee contracts, and product
development contracts, among others. The United States contends that certain of these financial
arrangements were improper, that the remuneration paid thereunder was improper and/or unlawful,
and that these arrangements caused hospitals and physicians to submit false and fraudulent claims
for replacement of hip and knee joints using Wright implants to Medicare.

     E. The United States contends also that it has certain administrative claims, as
specified in Section III, Paragraph 3, below, against Wright for engaging in the
Covered Conduct.

     F. This Agreement is made in compromise of disputed claims. It is neither an
admission by Wright nor a concession by the United States.

     G. To avoid the delay, uncertainty, inconvenience, and expense of protracted
litigation of the above claims, the Parties mutually desire to reach a full and final
settlement pursuant to the Terms and Conditions below.

III. TERMS AND CONDITIONS

     NOW THEREFORE, in consideration of the mutual promises, covenants, and obligations set
forth below, and for good and valuable consideration as stated herein, the Parties agree as
follows:

     1. Wright agrees to pay to the United States $7,929,900 (seven million, nine
hundred twenty-nine thousand, nine hundred dollars ) (the “Settlement Amount”). Wright
agrees to pay the Settlement Amount by electronic funds transfer pursuant to written
instructions to be provided by the United States Attorney’s Office for the District of New
Jersey. Wright shall

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make this electronic funds transfer within ten business days of the Effective Date of this
Agreement.

     2. Subject to the exceptions specified in Paragraph 4, below, and conditioned upon
Wright’s full payment of the Settlement Amount, the United States releases Wright together
with its current and former parent corporations; direct and indirect subsidiaries; brother
or sister corporations; divisions; and affiliates; and the predecessors, successors and
assigns of any of them from any civil or administrative monetary claim that the United
States has or may have for the Covered Conduct under the False Claims Act, 31 U.S.C. §§
3729-3733; the Civil Monetary Penalties Law, 42 U.S.C. § 1320a-7a; the Program Fraud Civil
Remedies Act, 31 U.S.C. §§ 3801-3812; and any statutory provision applicable to the
federally-funded programs listed in this Agreement for which the Civil Division, United
States Department of Justice has actual and present authority to assert and compromise
pursuant to 28 C.F.R. Part 0, Subpart I, § 0.45(d); and common law theories of payment by
mistake, unjust enrichment, disgorgement, fraud, and recoupment.

     3. In consideration of the obligations of Wright set forth in this Agreement, in the
DPA, and in the Corporate Integrity Agreement (“CIA”) entered into between HHS-OIG and
Wright, and conditioned upon Wright’s full payment of the Settlement Amount and
compliance with its obligations under the DPA, the HHS-OIG agrees to release and
refrain from instituting, directing, or maintaining any administrative claim or action
seeking exclusion from Medicare, Medicaid, and other Federal health care programs (as
defined in 42 U.S.C. § 1320a-7b(f)) against Wright, together with its current and former
parent corporations; direct and indirect subsidiaries; brother or sister corporations;
divisions; and affiliates; and the predecessors, successors and

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assigns of any of them, under 42 U.S.C. § 1320a-7a (Civil Monetary Penalties Law) or 42 U.S.C.
§ 1320a-7(b)(7) (permissive exclusion for fraud, kickbacks, and other prohibited activities) for
the Covered Conduct, except as reserved in Paragraph 4, below, and as reserved in this Paragraph.
The HHS-OIG expressly reserves all rights to comply with any statutory obligations to exclude
Wright, together with its current and former parent corporations; each of its direct and indirect
subsidiaries; brother or sister corporations; divisions; current or former owners, officers,
directors, and affiliates; and the predecessors, successors and assigns of any of them, from
Medicare, Medicaid, or other Federal health care programs under 42 U.S.C. § 1320a-7(a) (mandatory
exclusion) based upon the Covered Conduct. The HHS-OIG also expressly reserves all rights to
exclude Wright pursuant to the terms and conditions of Paragraph 51 of the DPA. Nothing in this
Paragraph precludes the HHS-OIG from taking action against entities or persons, or for conduct and
practices, for which claims have been reserved in Paragraph 4, below.

     4. Notwithstanding any term of this Agreement, specifically reserved and excluded from
the scope and terms of this Agreement as to any entity or person (including Wright) are the
following:

	 	a.	 	Any civil, criminal, or administrative liability
arising under Title 26, U.S.
Code (Internal Revenue Code);
	 
	 	b.	 	Any criminal liability;

	 
	 	c.	 	Except as
explicitly stated in this Agreement, any administrative liability, including
mandatory exclusion from Federal health care programs;
	 
	 	d.	 	Any liability to
the United States (or its agencies) for any conduct other than the Covered
Conduct;

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	 	e.	 	Any liability based upon such obligations as are created by this Agreement;
	 
	 	f.	 	Any liability for personal injury or property damage or for other consequential
damages arising from the Covered Conduct;
	 
	 	g.	 	Any liability for failure to deliver
goods or services due;
	 
	 	h.	 	Any liability of individuals, including officers and
employees; and
	 
	 	i.	 	Any liability for express or implied warranty claims or other
claims for defective or deficient products or services.

     5. Wright waives and shall not assert any defenses Wright may have to any criminal
prosecution or administrative action relating to the Covered Conduct, which defenses may be
based in whole or in part on a contention that, under the Double Jeopardy Clause in the
Fifth Amendment of the Constitution, or under the Excessive Fines Clause in the Eighth
Amendment of the Constitution, this Agreement bars a remedy sought in such criminal
prosecution or administrative action. Nothing in this Paragraph or any other provision of
this Agreement constitutes an agreement by the United States concerning the characterization
of the Settlement Amount for purposes of the Internal Revenue laws, Title 26 of the United
States Code.

     6. Wright fully and finally releases the United States, its agencies, employees,
servants, and agents from any claims (including attorney’s fees, costs, and expenses of
every kind and however denominated) that Wright has asserted, could have asserted, or may
assert in the future against the United States, its agencies, employees, servants, and
agents, related to the Covered Conduct and the United States’ investigation and prosecution
thereof.

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     7. The Settlement Amount shall not be decreased as a result of the denial of claims for
payment now being withheld from payment by any Medicare carrier or intermediary or any state
payor, related to the Covered Conduct; and, if applicable, Wright agrees not to resubmit to
any Medicare carrier or intermediary or any state payor any previously denied claims related
to the Covered Conduct, and agrees not to appeal any such denials of claims.

     8. Wright agrees to the following:

          a. Unallowable Costs Defined: That all costs (as
defined in the Federal Acquisition Regulation, 48 C.F.R. § 31.205-47; and in Titles XVIII
and XIX of the Social Security Act, 42 U.S.C. §§ 1395-1395kkk-1 and 1396-1396w-5; and the
regulations and official program directives promulgated thereunder) incurred by or on behalf
of Wright, together with its current and former parent corporations; each of its direct and
indirect subsidiaries; brother or sister corporations; divisions; current or former owners,
officers, directors, employees, shareholders, agents, and affiliates; and the predecessors,
successors and assigns of any of them in connection with the following shall be “unallowable
costs” on government
contracts and under the Medicare Program, Medicaid Program, TRICARE Program, and
Federal Employees Health Benefits Program (FEHBP):

               (1) the matters covered by this Agreement
and any related plea or deferred prosecution agreement;

               (2) the United States’ audit(s) and
civil and any criminal investigation(s) of the matters covered by this Agreement;

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               (3) Wright’s investigation, defense, and corrective actions undertaken
in response to the United States’ audit(s) and civil and any criminal investigation(s) in
connection with the matters covered by this Agreement (including attorney’s fees);

               (4) the negotiation and performance of this Agreement and any plea or
deferred prosecution agreement;

               (5) the payment Wright makes to the United States pursuant to this
Agreement, including any costs and attorneys fees; and

               (6) the negotiation of, and obligations undertaken pursuant to the CIA
to: (i) retain an independent review organization to perform annual reviews as described in
Section III of the CIA; and (ii) prepare and submit reports to the HHS-OIG. However, nothing in
this Paragraph 8.a.(6) that may apply to the obligations undertaken pursuant to the CIA affects
the status of costs that are not allowable based on any other authority applicable to Wright. (All
costs described or set forth in this Paragraph 8.a. are hereafter “unallowable costs.”)

          b. Future Treatment of Unallowable Costs: If applicable, these unallowable
costs shall be separately determined and accounted for by Wright, and Wright shall not charge
such unallowable costs directly or indirectly to any contracts with the United States or any State
Medicaid program, or seek payment for such unallowable costs through any cost report, cost
statement, information statement, or payment request submitted by Wright or any of its
subsidiaries or affiliates to the Medicare, Medicaid, TRICARE, or FEHBP Programs.

          c. Treatment of Unallowable Costs Previously Submitted for Payment: If
applicable, Wright further agrees that within 90 days of the Effective Date of this Agreement it
shall identify to applicable Medicare and TRICARE fiscal intermediaries, carriers, and/or

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contractors, and Medicaid and FEHBP fiscal agents, any unallowable costs (as defined in this
Paragraph) included in payments previously sought from the United States, or any State Medicaid
program, including, but not limited to, payments sought in any cost reports, cost statements,
information reports, or payment requests already submitted by Wright or any of its subsidiaries
or affiliates, and shall request, and agree, that such cost reports, cost statements, information
reports, or payment requests, even if already settled, be adjusted to account for the effect of
the inclusion of the unallowable costs. Wright agrees that the United States, at a minimum,
shall be entitled to recoup from Wright any overpayment plus applicable interest and penalties as
a result of the inclusion of such unallowable costs on previously-submitted cost reports,
information reports, cost statements, or requests for payment.

     Any payments due after the adjustments have been made shall be paid to the United
States pursuant to the direction of the Department of Justice and/or the affected agencies.
The United States reserves its rights to disagree with any calculations submitted by Wright
or any of its subsidiaries or affiliates on the effect of inclusion of
unallowable costs (as defined in this Paragraph) on Wright or any of its subsidiaries
or affiliates’ cost reports, cost statements, or information reports.

          d. Nothing in this
Agreement shall constitute a waiver of the rights of the United States to examine or
reexamine Wright’s books and records to determine that no unallowable costs have been
claimed in accordance with the provisions of this Paragraph.

     9. This Agreement is intended to be for the benefit of the Parties only. The Parties
do not release any claims against any other person or entity, except to the extent provided
for in Paragraphs 2, 3, 6, and 10.

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     10. Wright waives and shall not seek payment for any of the health care billings
covered by this Agreement from any health care beneficiaries or their parents, sponsors,
legally responsible individuals, or third party payors based upon the claims defined as
Covered Conduct.

     11. Wright warrants that it has reviewed its financial situation and that it currently
is solvent within the meaning of 11 U.S.C. §§ 547(b)(3) and 548(a)(1)(B)(ii)(I), and shall
remain solvent following its payment to the United States of the Settlement Amount.
Further, the Parties warrant that, in evaluating whether to execute this Agreement, they (a)
have intended that the mutual promises, covenants, and obligations set forth constitute a
contemporaneous exchange for new value given to Wright, within the meaning of 11 U.S.C. §
547(c)(1); and (b) conclude that these mutual promises, covenants, and obligations do, in
fact, constitute such a contemporaneous exchange. Further, the Parties warrant that the
mutual promises, covenants, and obligations set forth herein are intended
to and do, in fact, represent a reasonably equivalent exchange of value that is not
intended to hinder, delay, or defraud any entity to which Wright was or became indebted, on
or after the date of this transfer, all within the meaning of 11 U.S.C. § 548(a)(1).

     12. Each Party to this Agreement shall bear its own legal and other costs incurred in
connection with this matter, including the preparation and performance of this Agreement.

     13. Wright represents that this Agreement is freely and voluntarily entered into
without any degree of duress or compulsion whatsoever.

     14. This Agreement is governed by the laws of the United States. The Parties agree
that the exclusive jurisdiction and venue for any dispute arising between and among the
Parties under this Agreement is the United States District Court for the District of New
Jersey, except

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that disputes arising under the DPA and/or CIA shall be resolved exclusively under the dispute
resolution provisions in those agreements.

     15. For purposes of construing this Agreement, this Agreement shall be deemed to have
been drafted by all the Parties to this Agreement and shall not therefore be construed
against any Party for that reason in any subsequent dispute.

     16. This Agreement, together with the CIA and the DPA, constitute the complete
agreement between the Parties. This Agreement may not be amended except by written consent
of the Parties.

     17. The individuals signing this Agreement on behalf of Wright represent and warrant
that they are authorized by Wright to execute this Agreement. The United States signatories
represent that they are signing this Agreement in their official capacities and that they
are authorized to execute this Agreement.

     18. This Agreement may be executed in counterparts, each of which constitutes an
original and all of which constitute one and the same Agreement.

     19. This Agreement is binding on Wright’s successors, transferees, heirs, and assigns.

     20. All Parties consent to the United States’ disclosure of this Agreement and
information about this Agreement to the public.

     21. This Agreement is effective on the later of (1) the date of signature of the last
signatory to the Agreement; or (2) the date the Court approves of the DPA (“Effective Date”
of the Agreement). Facsimiles of signatures shall constitute acceptable, binding
signatures for purposes of this Agreement.

[SIGNATURE BLOCKS ON FOLLOWING PAGE].

Settlement Agreement Between the United States

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THE UNITED STATES OF AMERICA

	 	 	 	 	 
	  	J. GILMORE CHILDERS

Attorney for the United States Acting Under Authority

Conferred by 28 U.S.C. § 515

District of New Jersey

	 
	DATED: 9/29/10	BY: 	/s/: ALEX KRIEGSMAN 
	 	 	 	ALEX KRIEGSMAN

Assistant United States Attorney

  
	 
		

	 
	DATED: 9/29/10	BY: 	/s/: GREGORY E. DEMSKE 
	 		 	
GREGORY E. DEMSKE

Assistant Inspector General for Legal Affairs

Office of Counsel to the Inspector General

Office of Inspector General

United States Department of Health and Human Services

 
	 	 	 
	 

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WRIGHT
MEDICAL TECHNOLOGY, INC. — DEFENDANT

	 	 	 	 	 
	DATED: 9/22/10	BY: 	/s/: GARY D. HENLEY 
	 	 	 	GARY D. HENLEY

President and Chief Executive Officer

  
	 	 	 
	DATED: 9/23/10	BY: 	/s/: KAREN F. GREEN, ESQ. 
	 	 	 	KAREN F. GREEN, ESQ.

Wilmer Cutler Pickering Hale and Dorr LLP

Counsel for Wright Medical Technology, Inc.

 
	 

	 	 	 	 	 
	DATED: 9/22/10	BY: 	/s/: SANFORD V. TEPLITZKY, ESQ. 
	 	 	 	SANFORD V. TEPLITZKY, ESQ.

Ober, Kaler, Grimes & Shriver, P.C.

Counsel for Wright Medical Technology, Inc.

 
	 

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Exhibit 10.2

CORPORATE INTEGRITY AGREEMENT

between the

Office of Inspector General

of the

Department of Health and Human Services

and

Wright Medical Technology, Inc.

I. Preamble

     Wright Medical Technology, Inc. (Wright) hereby enters into this
Corporate Integrity Agreement (CIA) with the Office of Inspector General (OIG) of the
United States Department of Health and Human Services (HHS) to promote compliance with the
statutes, regulations, and written directives of Medicare, Medicaid, and all other Federal
health care programs (as defined in 42 U.S.C. § 1320a-7b(f)) (Federal health care program
requirements). Contemporaneously with this CIA, Wright is entering into a Settlement
Agreement and Deferred Prosecution Agreement (DPA) with the United States. This CIA shall
apply only to U.S. operations of Wright that are subject to U.S. Federal health care
program requirements.

     Wright represented to the OIG that, prior to the effective date of this CIA, Wright
established a voluntary compliance program, which includes a corporate compliance officer, a
corporate compliance committee, a Code of Business Conduct and Ethics for all employees,
written policies and procedures, educational and training initiatives, review and
disciplinary procedures, a confidential disclosure program, an ineligible persons screening
program, and internal audit and review procedures. Wright agrees to continue the operation
of its compliance program in accordance with the terms set forth below for the term of this
CIA.

II. Term and Scope of the CIA

     A. The period of the compliance obligations assumed by Wright under this CIA shall be
5 years from the effective date of this CIA, unless otherwise specified. The
effective date shall be the date on which the final signatory of this CIA executes this CIA
(Effective Date). Each one-year period, beginning with the one-year period following the
Effective Date, shall be referred to as a “Reporting Period.”

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     B. Suspension of Requirements of Section III.A through Section III.E.

     The requirements set forth in Section III.A through Section III.E will be suspended
during the first 12 months of the CIA unless (a) the DPA is no longer in effect; or (b) OIG
lifts the suspension. The determination as to whether or not to lift the suspension of
Section III.A through Section III.E requirements shall be made at the sole discretion of the
OIG. In the event that any requirements of Section III.A through Section III.E are no longer
suspended, Wright shall within 90 days implement all requirements of Section III.A through
III.E. Within 30 days of Wright’s engagement of an Independent Review Organization (“IRO”),
Wright shall provide the information described in Appendix A.

     C. Sections VII, X, and XI shall expire no later than 120 days after OIG=s receipt
of: (1) Wright’s final annual report; or (2) any additional materials submitted by Wright
pursuant to OIG’s request, whichever is later.

     D. The scope of this CIA shall be governed by the following definitions:

          1. “Arrangements” shall mean every arrangement or transaction that involves,
directly or indirectly, the offer, payment, solicitation, or receipt of anything of
value; and is between Wright and any actual or potential source of health care
business or referrals to Wright or any actual or potential recipient of health care
business or referrals from Wright. The term “source of health care business or
referrals” shall mean any individual or entity that refers, recommends, arranges for,
orders, leases, or purchases any good, facility, item, or service for which payment
may be made in whole or in part by a Federal health care program and the term
“recipient of health care business or referrals” shall mean any individual or entity
(1) to whom Wright refers an individual for the furnishing or arranging for the
furnishing of any item or service, or (2) from whom Wright purchases, leases or
orders or arranges for or recommends the purchasing, leasing, or ordering of any
good, facility, item, or service for which payment may be made in whole or in part by
a Federal health care program.

          2. “Focus Arrangements” means every Arrangement that is between Wright and any
actual source of health care business or referrals to Wright and involves, directly
or indirectly, the offer, payment, or provision of anything of value.

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     Notwithstanding the foregoing provisions of Section II.D.2, any Arrangement that
satisfies the requirements of 42 C.F.R. § 411.357(g) (remuneration unrelated to the
provision of designated health services); 42 C.F.R. § 411.357(i) (payments by a physician
for items and services); 42 C.F.R. § 411.357(k) (non-monetary compensation); or any
exception to the prohibitions of 42 U.S.C. § 1395nn, enacted following the Effective Date
that does not require a written agreement shall not be considered a Focus Arrangement for
purposes of this CIA.

          3. “Covered Persons” includes:

a. all owners (other than shareholders who: (1) have an ownership interest of
less than 5%; and (2) acquired the ownership interest through public trading),
officers, directors, and employees of Wright;

b. all contractors,
subcontractors, agents, and other persons who, on behalf of Wright, perform
functions related to the sale or marketing of items or services reimbursable
by Federal health care programs; and

c. all individuals that sell or market on behalf of Wright items or
services for which reimbursement may be made by the Federal health care
programs.

          Notwithstanding the above, this term does not include part-time or per diem
employees, contractors, subcontractors, agents, and other persons who are not
reasonably expected to work more than 160 hours per year, except that any such
individuals shall become “Covered Persons” at the point when they work more than 160
hours during the calendar year.

          4. “Arrangements Covered Persons” includes each Covered Person who is involved with
the development, approval, management, or review of Wright’s Arrangements.

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III. Corporate Integrity Obligations

     Wright shall maintain a Compliance Program that includes the following
elements:

     A. Compliance Officer and Committee.

          1. Compliance Officer. Wright has appointed, and shall maintain during the
term of the CIA, an individual to serve as its Compliance Officer. To the extent
necessary, within 120 days after the Effective Date, Wright shall modify the position
description, scope of responsibility, and authority of the Compliance Officer such
that the following requirements are satisfied. The Compliance Officer shall be
responsible for developing and implementing policies, procedures, and practices
designed to ensure compliance with the requirements set forth in this CIA and with
Federal health care program requirements. The Compliance Officer shall be a member
of senior management of Wright, and shall report directly to the Nominating,
Compliance and Governance Committee of the Board of Directors and indirectly to the
President and CEO. The Compliance Officer shall make periodic (at least quarterly)
reports regarding compliance matters directly to the Board of Directors of Wright,
and shall be authorized to report on such matters to the Board of Directors at any
time. The Compliance Officer shall not be or be subordinate to the General Counsel
or Chief Financial Officer. The Compliance Officer shall be responsible for
monitoring the day-to-day compliance activities engaged in by Wright as well as for
any reporting obligations created under this CIA. Any noncompliance job
responsibilities of the Compliance Officer shall be limited and must not interfere
with the Compliance Officer’s ability to perform the duties outlined in this CIA.

     Wright shall report to OIG, in writing, any changes in the identity or position
description of the Compliance Officer, or any actions or changes that would affect the
Compliance Officer’s ability to perform the duties necessary to meet the obligations in
this CIA, within five days after such a change.

          2. Compliance Committee. Wright has appointed, and shall maintain during the
term of the CIA, a Compliance Committee. To the extent necessary, within 120 days
after the Effective Date, Wright shall amend the duties, responsibilities and
authorities of the Compliance Committee to meet the requirements set forth below. The
Compliance Committee shall, at a minimum, include the Compliance Officer and other
members of senior management necessary to meet the requirements of this CIA (e.g.,

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senior executives of relevant departments, such as billing, clinical, human resources, audit,
and operations). The Compliance Officer shall chair the Compliance Committee and the Committee
shall support the Compliance Officer in fulfilling his/her responsibilities (e.g., shall assist in
the analysis of Wright’s risk areas and shall oversee monitoring of internal and external audits
and investigations). The Compliance Committee shall meet at least quarterly.

     Wright shall report to OIG, in writing, any changes in the composition of the
Compliance Committee, or any actions or changes that would affect the Compliance
Committee’s ability to perform the duties necessary to meet the obligations in this CIA,
within 15 days after such a change.

     B. Written Standards.

          1. Code of Conduct. Within 90 days after the Effective Date, Wright shall
develop, implement, and distribute a written Code of Conduct to all Covered
Persons. Wright shall make the promotion of, and adherence to, the Code of
Conduct an element in evaluating the performance of all employees. The Code of
Conduct shall, at a minimum, set forth the following elements:

a. Wright’s commitment to full compliance with all Federal health care
program requirements;

b. Wright’s requirement that all of its Covered Persons shall be
expected to comply with all Federal health care program requirements and
with Wright’s own Policies and Procedures;

c. the requirement that all of Wright’s Covered Persons shall be expected to
report to the Compliance Officer, or other appropriate individual designated
by Wright, suspected violations of any Federal health care program
requirements or of Wright’s own Policies and Procedures;

d. the right of all individuals to use the Disclosure Program described
in Section III.F, and Wright’s commitment to nonretaliation and to
maintain, as appropriate, confidentiality and anonymity with respect to
such disclosures.

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     Within 90 days after the Effective Date, each Covered Person shall certify, in writing,
that he or she has received, read, understood, and shall abide by Wright’s Code of Conduct. New
Covered Persons shall receive the Code of Conduct and shall complete the required certification
within 30 days after becoming a Covered Person or within 90 days after the Effective Date,
whichever is later.

     Wright shall periodically review the Code of Conduct to determine if revisions are
appropriate and shall make any necessary revisions based on such review. Any revised
Code of Conduct shall be distributed within 30 days after any revisions are finalized.
Each Covered Person shall certify, in writing, that he or she has received, read,
understood, and shall abide by the revised Code of Conduct within 30 days after the
distribution of the revised Code of Conduct.

          2. Policies and Procedures. Within 90 days after the Effective Date, Wright
shall implement written Policies and Procedures regarding the operation of
Wright’s compliance program, including the compliance program requirements
outlined in this CIA, and Wright’s compliance with Federal health care program
requirements. The Policies and Procedures also shall address:

a. 42 U.S.C. § 1320a-7b(b) (Anti-Kickback Statute) and the regulations and
other guidance documents related to this statute, and business or financial
arrangements or contracts that generate unlawful Federal health care
program business in violation of the Anti-Kickback Statute; and

b. the
requirements set forth in Section III.D (Compliance with the Anti-Kickback
Statute).

     Within 90 days after the Effective Date, the relevant portions of the Policies and
Procedures shall be distributed and/or made available (electronically or in hard copy
form) to all Covered Persons whose job functions relate to those Policies and Procedures.
Appropriate and knowledgeable staff shall be available to explain the Policies and
Procedures.

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     At least annually (and more frequently, if appropriate), Wright shall assess and
update, as necessary, the Policies and Procedures. Within 30 days after the effective date
of any revisions, the relevant portions of any such revised Policies and Procedures shall
be distributed and/or made available to all Covered Persons whose job functions relate to
those Policies and Procedures.

     C. Training and Education.

          1. General Training. Within 90 days after the Effective Date, Wright shall
provide at least two hours of General Training to each Covered Person. This
training, at a minimum, shall explain Wright’s:

a. CIA requirements; and

b. Wright’s Compliance Program, including the Code of Conduct.

     New Covered Persons shall receive the General Training described above within 30
days after becoming a Covered Person or within 90 days after the Effective Date,
whichever is later. After receiving the initial General Training described above, each
Covered Person shall receive at least one hour of General Training in each subsequent
Reporting Period.

          2. Arrangements Training. Within 90 days after the Effective Date, each
Arrangements Covered Person shall receive at least three hours of Arrangements
Training, in addition to the General Training required above. The Arrangements
Training shall include a discussion of:

a. Arrangements that potentially implicate the Anti-Kickback Statute as
well as the regulations and other guidance documents related to this
statute;

b. Wright’s policies, procedures, and other requirements relating to
Arrangements and Focus Arrangements, including but not limited to the Focus
Arrangements Tracking System, the internal review and approval process, and
the tracking of remuneration to and from sources of health care business or
referrals required by Section III.D of the CIA;

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c. the personal obligation of each individual involved in the
development, approval, management, or review of Wright’s Arrangements
to know the applicable legal requirements and Wright’s policies and
procedures;

d. the legal sanctions under the Anti-Kickback Statute; and

e. examples of violations of the Anti-Kickback Statute.

     New Arrangements Covered Persons shall receive this training within 30 days after the
beginning of their employment or becoming Arrangements Covered Persons, or within 90 days
after the Effective Date, whichever is later.

     After receiving the initial Arrangements Training described in this Section, each
Arrangements Covered Person shall receive at least two hours of Arrangements Training in
each subsequent Reporting Period.

          3. Certification. Each individual who is required to attend training shall
certify, in writing, or in electronic form, if applicable, that he or she has
received the required training. The certification shall specify the type of training
received and the date received. The Compliance Officer (or designee) shall retain
the certifications, along with all course materials. These shall be made available
to OIG, upon request.

          4. Qualifications of Trainer. Persons providing the training shall be
knowledgeable about the subject area.

          5. Update of Training. Wright shall review the training annually, and, where
appropriate, update the training to reflect changes in Federal health care program
requirements, any issues discovered during internal audits or the Arrangements
Review, and any other relevant information.

          6. Computer-based Training. Wright may provide the training required under
this CIA through appropriate computer-based training approaches. If Wright
chooses to provide computer-based training, it shall make available appropriately
qualified and knowledgeable staff or trainers to answer questions or provide
additional information to the individuals receiving such training.

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     D. Compliance with the Anti-Kickback Statute.

          1. Focus Arrangements Procedures. Within 90 days after the Effective Date,
Wright shall create procedures reasonably designed to ensure that each existing and
new or renewed Focus Arrangement does not violate the Anti-Kickback Statute or the
regulations, directives, and guidance related to this statute (Focus Arrangements
Procedures). These procedures shall include the following:

a. creating and maintaining a centralized tracking system for all
existing and new or renewed Focus Arrangements (Focus Arrangements
Tracking System);

b. tracking remuneration to and from all parties to Focus
Arrangements;

c. tracking service and activity logs to ensure that parties to the Focus
Arrangement are performing the services required under the applicable Focus
Arrangement(s) (if applicable);

d. monitoring the use of leased space, medical supplies, medical devices,
equipment, or other patient care items to ensure that such use is
consistent with the terms of the applicable Focus Arrangement(s) (if
applicable);

e. establishing and implementing a written review and approval process for
all Focus Arrangements, the purpose of which is to ensure that all new and
existing or renewed Focus Arrangements do not violate the Anti-Kickback
Statute, and that includes at least the following: (i) a legal review of all
Focus Arrangements by counsel with expertise in the Anti-Kickback Statute,
(ii) a process for specifying the business need or business rationale for all
Focus Arrangements, and (iii) a process for determining and documenting the
fair market value of the remuneration specified in the Focus Arrangement;

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f. requiring the Compliance Officer to review the Focus Arrangements
Tracking System, internal review and approval process, and other Focus
Arrangements Procedures on at least an annual basis and to provide a report
on the results of such review to the Compliance Committee; and

g. implementing effective responses when suspected violations of the
Anti-Kickback Statute are discovered, including disclosing Reportable
Events pursuant to Section III.I. when appropriate.

          2. New or Renewed Focus Arrangements. Prior to entering into new Focus
Arrangements or renewing existing Focus Arrangements, in addition to complying with
the Focus Arrangements Procedures set forth above, Wright shall comply with the
following requirements (Focus Arrangements Requirements):

a. Ensure that each Focus Arrangement is set forth in writing and signed
by Wright and the other parties to the Focus Arrangement;

b. Include in the written agreement a requirement that each party to a Focus
Arrangement who meets the definition of a Covered Person shall complete the
Arrangements Training set forth in Section III.C.2 of this CIA. Additionally,
Wright shall provide each party to the Focus Arrangement with a copy of its
Code of Conduct and Anti-Kickback Statute Policies and Procedures;

c. Include in the written agreement a certification by the parties to the
Focus Arrangement that the parties shall not violate the Anti-Kickback
Statute with respect to the performance of the Arrangement.

          3. Records Retention and Access. Wright shall retain and make available to
OIG, upon request, the Focus Arrangements Tracking System and all supporting
documentation of the Focus Arrangements subject to this Section and, to the extent
available, all non-privileged communications related to the Focus Arrangements and
the actual performance of the duties under the Focus Arrangements.

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     E. Review Procedures.

          1. General Description.

a. Engagement of Independent Review Organization. Within 90 days after the
Effective Date, Wright shall engage an individual or entity (or entities),
such as an accounting, auditing, law, or consulting firm (hereinafter
“Independent Review Organization” or “IRO”), to perform the review outlined in
Appendix B of this CIA. (Arrangements Review). The IRO engaged by Wright to
perform the Arrangements Review shall be knowledgeable about the Anti-Kickback
Statute and the regulations and other guidance documents related to this
statute.

Each IRO shall assess, along with Wright, whether it can perform the IRO
review in a professionally independent and objective fashion, as appropriate
to the nature of the engagement, taking into account any other business
relationships or other engagements that may exist. The engagement of the IRO
for the Arrangements Review shall not be deemed to create an attorney-client
or other privileged relationship between Wright and the IRO. The other
applicable requirements relating to the IRO(s) are outlined in Appendix A to
this CIA, which is incorporated by reference.

b. Frequency of Arrangements Review. The Arrangements Review shall be
performed annually and shall cover each of the Reporting Periods. The
IRO(s) shall perform all components of each annual Arrangements Review.

c. Retention of Records. The IRO and Wright shall retain and make available
to OIG, upon request, all work papers, supporting documentation,
correspondence, and draft reports (those exchanged between the IRO and
Wright) related to the reviews.

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d. Responsibilities and Liabilities. Nothing in this Section III.E
affects Wright’s responsibilities or liabilities under any criminal, civil,
or administrative laws or regulations applicable to any Federal health care
program including, but not limited to, the Anti-Kickback Statute.

          2. Arrangements Review. The IRO shall perform Arrangements Reviews and
prepare reports as outlined in Appendix B to this CIA, which is incorporated by
reference.

          3. Validation Review. In the event OIG has reason to believe that: (a)
Wright’s Arrangements Review fails to conform to the requirements of this CIA; or
(b) the IRO’s findings or Arrangements Review results are inaccurate, OIG may, at
its sole discretion, conduct its own review to determine whether the Arrangements
Review complied with the requirements of the CIA and/or the findings or Arrangements
Review results are inaccurate (Validation Review). Wright shall pay for the
reasonable cost of any such review performed by OIG or any of its designated agents.
Any Validation Review of Reports submitted as part of Wright’s final Annual Report
shall be initiated no later than one year after Wright’s final submission (as
described in Section II)is received by OIG.

          Prior to initiating a Validation Review, OIG shall notify Wright of its intent
to do so and provide a written explanation of why OIG believes such a review is
necessary. To resolve any concerns raised by OIG, Wright may request a meeting with
OIG to: (a) discuss the results of any Arrangements Review submissions or findings;
(b) present any additional information to clarify the results of the Arrangements
Review or to correct the inaccuracy of the Arrangements Review; and/or (c) propose
alternatives to the proposed Validation Review. Wright agrees to provide any
additional information as may be requested by OIG under this Section III.E.3. in an
expedited manner. OIG will attempt in good faith to resolve any Arrangements Review
issues with Wright prior to conducting a Validation Review. However, the final
determination as to whether or not to proceed with a Validation Review shall be made
at the sole discretion of OIG.

          4. Independence and Objectivity Certification. The IRO shall include in its
report(s) to Wright a certification or sworn affidavit that it has evaluated its
professional independence and objectivity, as appropriate to the nature of the
engagement, with regard to the Arrangements Review and that it has concluded that it
is, in fact, independent and objective.

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          5. New or Renewed Consulting Agreements. All new Consulting
Agreements and renewals executed on or after the Effective Date shall
require
Consultants to disclose their financial engagement with Wright to their patients, as well as to
their affiliated hospitals.

a. “Consultant” is defined as any United States-based orthopaedic surgeon,
PhD, health care professional, non-physician practitioner, medical fellow,
resident or student, hospital, medical institution, or any employee or agent
of any educational or health care organization that Wright retains for any
personal or professional services or compensates or remunerates in any way,
directly or indirectly, for or in anticipation of personal or professional
services relating to hip and knee reconstruction and replacement in the United
States. The term “Consultant” shall not include accountants, auditors,
attorneys, fair market value specialists, CME providers, reimbursement
specialists, any non-physician engineering or marketing consultants, or any
other types of non-physician professionals or entities excluded from this
definition by the OIG upon recommendation by Wright.

b. “Consulting Agreement” includes all contracts with Consultants for
services to be performed on behalf of Wright relating to hip and knee
reconstruction and replacement in the United States. This includes, but is
not limited to, agreements for compensation, payments, remuneration,
honoraria, fellowships, professional meetings, speaking engagements,
teaching, publications, clinical studies, fee-for-service consulting, product
development and license agreements, research, and professional services
agreements. The term “Consulting Agreement” also includes agreements to
provide grants, donations, sponsorships and other forms of payment to medical
educational organizations, medical societies and training institutions.

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     F. Disclosure Program.

     Wright currently has a disclosure program that Wright represents is designed to
facilitate communications relating to compliance with Federal health care program
requirements and Wright’s policies (the (Disclosure Program”). Wright shall continue to
maintain a Disclosure Program that includes a mechanism (e.g., a toll-free compliance
telephone line) to enable individuals to disclose, to the Compliance Officer or some other
person who is not in the disclosing individual’s chain of command, any identified issues or
questions associated with Wright’s policies, conduct, practices, or procedures with respect
to a Federal health care program believed by the individual to be a potential violation of
criminal, civil, or administrative law. Wright shall appropriately publicize the existence
of the disclosure mechanism (e.g., via periodic e-mails to employees or by posting the
information in prominent common areas).

     The Disclosure Program shall emphasize a nonretribution, nonretaliation policy, and
shall include a reporting mechanism for anonymous communications for which appropriate
confidentiality shall be maintained. Upon receipt of a disclosure, the Compliance Officer
(or designee) shall gather all relevant information from the disclosing individual. The
Compliance Officer (or designee) shall make a preliminary, good faith inquiry into the
allegations set forth in every disclosure to ensure that he or she has obtained all of the
information necessary to determine whether a further review should be conducted. For any
disclosure that is sufficiently specific so that it reasonably: (1) permits a
determination of the appropriateness of the alleged improper practice; and (2) provides an
opportunity for taking corrective action, Wright shall conduct an internal review of the
allegations set forth in the disclosure and ensure that proper follow-up is conducted.

     The Compliance Officer (or designee) shall maintain a disclosure log, which shall
include a record and summary of each disclosure received (whether anonymous or not), the
status of the respective internal reviews, and any corrective action taken in response to
the internal reviews. The disclosure log shall be made available to OIG upon request.

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     G. Ineligible Persons.

          1. Definitions. For purposes of this CIA:

a. an “Ineligible Person” shall include an individual or entity who:

i. is currently excluded, debarred, suspended, or otherwise
ineligible to participate in the Federal health care programs or in
Federal procurement or nonprocurement programs; or

ii. has been convicted of a criminal offense that falls within the
scope of 42 U.S.C. § 1320a-7(a), but has not yet been excluded,
debarred, suspended, or otherwise declared ineligible.

b. “Exclusion Lists” include:

i. the HHS/OIG List of Excluded Individuals/Entities (available
through the Internet at http://www.oig.hhs.gov); and

ii. the General Services Administration’s List of Parties
Excluded from Federal Programs (available through the Internet
at http://www.epls.gov).

          2. Screening Requirements. Wright shall ensure that all Covered Persons are
not Ineligible Persons, by implementing the following screening requirements:

a. Wright shall screen all Covered Persons against the Exclusion Lists
prior to engaging their services and, as part of the hiring or contracting
process, shall require such Covered Persons to disclose whether they are
Ineligible Persons.

b. Wright shall screen all Covered Persons against the Exclusion Lists
within 90 days after the Effective Date and on an annual basis thereafter.

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c. Wright shall implement a policy requiring all Covered Persons to
disclose immediately any debarment, exclusion, suspension, or other event
that makes that person an Ineligible Person.

          Nothing in this Section affects Wright’s responsibility to refrain from (and liability for)
billing Federal health care programs for items or services furnished, ordered, or prescribed by an
excluded person. Wright understands that items or services furnished by excluded persons are not
payable by Federal health care programs and that Wright may be liable for criminal, civil, and
administrative sanctions for employing or contracting with an excluded person regardless of whether
Wright meets the requirements of this Section III.G.

          3. Removal Requirement. If Wright has actual notice that a Covered Person has
become an Ineligible Person, Wright shall remove such Covered Person from
responsibility for, or involvement with, Wright’s business operations related to the
Federal health care programs and shall remove such Covered Person from any position
for which the Covered Person’s compensation or the items or services furnished,
ordered, or prescribed by the Covered Person are paid in whole or part, directly or
indirectly, by Federal health care programs or otherwise with Federal funds at least
until such time as the Covered Person is reinstated into participation in the
Federal health care programs.

          4. Pending Charges and Proposed Exclusions. If Wright has actual notice that a
Covered Person is charged with a criminal offense that falls within the scope of 42
U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion during the
Covered Person’s employment or contract term of during the term of a physician’s or
other practitioner’s medical staff privilege, Wright shall take all appropriate
actions to ensure that the responsibilities of that Covered Person have not and shall
not adversely affect the quality of care rendered to any beneficiary, patient, or
resident, or any claims submitted to any Federal health care program.

     H. Notification of Government Investigation or Legal Proceedings.

     Within 30 days after discovery, Wright shall notify OIG, in writing, of any ongoing
investigation or legal proceeding known to Wright conducted or brought by a governmental
entity or its agents involving an allegation that Wright has committed a crime or has
engaged in fraudulent activities. This notification shall include a description of the
allegation, the identity of the investigating or prosecuting agency, and the status of such
investigation or legal proceeding. Wright shall also provide written notice to OIG

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within 30 days after the resolution of the matter, and shall provide OIG with a description of
the findings and/or results of the investigation or proceedings, if any.

     I. Reportable Events.

          1. Definition of Reportable Event. For purposes of this CIA, a “Reportable
Event” means anything that involves:

a. a matter that a reasonable person would consider a probable violation of
criminal, civil, or administrative laws applicable to any Federal health care
program for which penalties or exclusion may be authorized;

b. the employment of or contracting with a Covered Person who is an
Ineligible Person as defined by Section III.G.1.a; or

c. the filing of a bankruptcy petition by Wright.

A Reportable Event may be the result of an isolated event or a series of occurrences.

          2. Reporting of Reportable Events. If Wright determines (after a reasonable
opportunity to conduct an appropriate review or investigation of the allegations)
through any means that there is a Reportable Event, Wright shall notify OIG, in
writing, within 30 days after making the determination that the Reportable Event
exists.

          3. Reportable Events under Section III.I.1.a. and b. For Reportable Events
under Section III.I.1.a. and b., the report to the OIG shall include:

a. a complete description of the Reportable Event, including the relevant
facts, persons involved, and legal and Federal health care program
authorities implicated;

b. a description of Wright’s actions taken to correct the Reportable Event;
and

c. any further steps Wright plans to take to address the Reportable Event
and prevent it from recurring.

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          4. Reportable Events under Section III.I.1.c. For Reportable Events
under Section III.I.1.c., the report to the OIG shall include documentation of the
bankruptcy filing and a description of any Federal health care program authorities
implicated.

     J. Cooperation With Government Investigations.

     Upon reasonable notice, Wright shall cooperate with all OIG investigations and understands
that full cooperation includes: (1) prompt and truthful disclosure to OIG of all matters relating
to any Federal or state health care law investigation, prosecution, or other enforcement action,
related to the Covered Conduct, including other matters involving possible violations of Federal or
state health care law by individuals or entities in the orthopedic medical device industry; and (2)
truthful testimony in any administrative hearing and/or court proceeding. Wright, upon reasonable
notice, will make reasonable efforts to facilitate access to, and encourage the cooperation of, its
directors, officers, and employees for interviews and testimony, and will furnish to the OIG, upon
reasonable request, all documents and records in its possession, custody, or control relating to
the Covered Conduct. Section III.J. shall not require the Company’s waiver of attorney-client and
work product protections. Nothing in Section III.J. shall be construed as a waiver of any
applicable attorney-client or work product privileges.

     As used herein, the term “Covered Conduct” shall have the same meaning as set forth in the
Civil Settlement Agreement.

IV. Changes to Business Units or Locations

     A. Change or Closure of Unit or Location.

     In the event that, after the Effective Date, Wright changes locations or closes a
business unit or location related to the furnishing of items or services that may be
reimbursed by Federal health care programs, Wright shall notify OIG of this fact as soon as
possible, but no later than within 30 days after the date of change or closure of the
location.

     B. Purchase or Establishment of New Unit or Location.

     In the event that, after the Effective Date, Wright purchases or establishes a new
business unit or location related to the furnishing of items or services that may be

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reimbursed by Federal health care programs, Wright shall notify OIG at least 30 days prior to
such purchase or the operation of the new business unit or location. This notification shall
include the address of the new business unit or location, phone number, fax number, the location’s
Medicare and state Medicaid program provider number and/or supplier number(s), (if applicable),
and the name and address of each contractor that issued each number (if applicable). Each new
business unit or location and all Covered Persons at each new business unit or location shall be
subject to the applicable requirements of this CIA.

     C. Sale of Unit or Location.

     In the event that, after the Effective Date, Wright proposes to sell any or all of
its business units or locations that are subject to this CIA, Wright shall notify OIG of
the proposed sale at least 30 days prior to the sale of such business unit or location.
This notification shall include a description of the business unit or location to be sold,
a brief description of the terms of the sale, and the name and contact information of the
prospective purchaser. This CIA shall be binding on the purchaser of such business unit
or location, unless otherwise determined and agreed to in writing by the OIG.

V. Implementation and Annual Reports

     A. Implementation Report.

     Within 90 days after either the termination or lifting of the suspension, Wright shall
submit a written report to OIG summarizing the status of its implementation of the
requirements of this CIA (Implementation Report). The Implementation Report shall, at a
minimum, include:

          1. the name, address, phone number, and position description of the
Compliance Officer required by Section III.A, and a summary of other
noncompliance job responsibilities the Compliance Officer may have;

          2. the names and positions of the members of the Compliance Committee required
by Section III.A;

          3. a copy of Wright’s Code of Conduct required by Section III.B.1;

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          4. a summary of all Policies and Procedures required by Section III.B.2
(a copy of such Policies and Procedures shall be made available to OIG upon
request);

          5. the number of individuals required to complete the Code of Conduct
certification required by Section III.B.1, the percentage of individuals who have
completed such certification, and an explanation of any exceptions (the
documentation supporting this information shall be available to OIG, upon
request);

          6. the following information regarding each type of training required by
Section III.C:

a. a description of such training, including a summary of the topics
covered, the length of sessions, and a schedule of training sessions;

b. the number of individuals required to be trained, percentage of
individuals actually trained, and an explanation of any exceptions.

A copy of all training materials and the documentation supporting this information shall be
available to OIG, upon request.

          7. a description of the Focus Arrangements Tracking System required by Section III.D.1.a;

          8. a description of the internal review and approval process required by Section
III.D.1.e;

          9. a description of the tracking and monitoring procedures and other Focus Arrangements
Procedures required by Section III.D.1;

          10. a description of the Disclosure Program required by Section III.F;

          11. information regarding the IRO(s) described in Appendix A;

          12. a description of the process by which Wright fulfills the requirements of
Section III.G regarding Ineligible Persons;

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          13. a list of all of Wright’s locations (including locations and mailing
addresses); the corresponding name under which each location is doing business; the
corresponding phone numbers and fax numbers; each location’s Medicare and state
Medicaid program provider number(s) and/or supplier number(s) (if applicable); and
the name and address of each Medicare and state Medicaid program contractor to
which Wright currently submits claims (if applicable);

          14. a description of Wright’s corporate structure, including identification of
any parent and sister companies, subsidiaries, and their respective lines of
business;

          15. a summary of Reportable Events (as defined in Section III.I.) identified during
the Reporting Period and the status of any corrective and preventative action
relating to all such Reportable Events;

          16. a summary of the disclosures in the disclosure log required by Section
III.F that: (a) relate to Federal health care programs; or (b) involve allegations
of conduct that may involve illegal remunerations or inappropriate referrals in
violation of the Anti-Kickback Statute;

          17. a summary describing any ongoing investigation or legal proceeding
required to have been reported pursuant to Section III.H. The summary shall
include a description of the allegation, the identity of the investigating or
prosecuting agency, and the status of such investigation or legal proceeding; and

          18. the certifications required by Section V.D.

     B. Monitor Reports.

     1. Wright shall submit to OIG any report or written recommendations produced by the
Monitor (as defined under the DPA) pursuant to the DPA within 5 days of Wright receiving any
report or written recommendations from the Monitor.

     2. Wright shall submit to OIG any report Wright provides to the Monitor pursuant to
the DPA at the same time Wright provides such documentation to the Monitor.

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     3. Any written documentation Wright provides to the Monitor pursuant to the
DPA shall be made available to the OIG upon request.

     C. Annual Reports.

     Wright shall submit to OIG annually a report with respect to the status of, and
findings regarding, Wright’s compliance activities for each Reporting Period (Annual
Report).

Each Annual Report shall include, at a minimum:

          1. any change in the identity, position description, or other noncompliance
job responsibilities of the Compliance Officer and any change in the membership of
the Compliance Committee described in Section III.A;

          2. a summary of any significant changes or amendments to the Policies and
Procedures required by Section III.B.2 and the reasons for such
changes (e.g., change
in contractor policy);

          3. the number of individuals required to complete the Code of Conduct
certification required by Section III.B.1, the percentage of individuals who have
completed such certification, and an explanation of any exceptions (the
documentation supporting this information shall be available to OIG, upon
request);

          4. the following information regarding each type of training required by
Section III.C:

a. a description of the initial and annual training, including a
summary of the topics covered, the length of sessions, and a schedule
of training sessions;

b. the number of individuals required to complete the initial and annual
training, the percentage of individuals who actually completed the initial
and annual training, and an explanation of any exceptions.

A copy of all training materials and the documentation supporting this information shall be
available to OIG, upon request.

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          5. a description of any changes to the Focus Arrangements Tracking System
required by Section III.D.1.a;

          6. a description of any changes to the internal review and
approval process required by Section III.D.1.e;

          7. a description of any changes to the tracking and monitoring procedures and other Focus
Arrangements Procedures required by Section III.D.1;

          8. a complete copy of all reports prepared pursuant to Section III.E, along
with a copy of the IRO’s engagement letter;

          9. Wright’s response to the reports prepared pursuant to Section III.E., along with
corrective action plan(s) related to any issues raised by the reports;

          10. a summary and description of any and all current and prior engagements
and agreements between Wright and the IRO, if different from what was submitted
as part of the Implementation Report;

          11. a certification from the IRO regarding its professional
independence and objectivity with respect to Wright;

          12. a summary of Reportable Events (as defined in Section III.I.) identified
during the Reporting Period and the status of any corrective and preventative action
relating to all such Reportable Events;

          13. a summary of the disclosures in the disclosure log required by Section
III.F that: (a) relate to Federal health care programs; or (b) involve allegations
of conduct that may involve illegal remunerations or inappropriate referrals in
violation of the Anti-Kickback Statute;

          14. any changes to the process by which Wright fulfills the requirements
of Section III.G regarding Ineligible Persons;

          15. a summary describing any ongoing investigation or legal proceeding
required to have been reported pursuant to Section III.H. The summary shall
include a description of the allegation, the identity of the investigating or
prosecuting agency, and the status of such investigation or legal proceeding;

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          16. a description of all changes to the most recently provided list of
Wright’s locations (including addresses) as required by Section V.A.13; the
corresponding name under which each location is doing business; the corresponding
phone numbers and fax numbers; each location’s Medicare and state Medicaid program
provider number(s) and/or supplier number(s) (if applicable); and the name and
address of each Medicare and state Medicaid program contractor to which Wright
currently submits claims (if applicable); and

          17. the certifications required by Section V.D.

     The first Annual Report shall be received by OIG no later than 60 days after the end of the
second Reporting Period. Subsequent Annual Reports shall be received by OIG no later than the
anniversary date of the due date of the first Annual Report.

     D. Certifications.

     The Implementation Report and Annual Reports shall include a certification by the Compliance
Officer that:

          1. to the best of his or her knowledge, except as otherwise described in the
applicable report, Wright is in compliance with all of the requirements of this CIA;

          2. to the best of his or her knowledge, Wright has implemented procedures
reasonably designed to ensure that all Focus Arrangements do not violate the
Anti-Kickback Statute, including the Focus Arrangements Procedures required in
Section III.D of the CIA;

          3. to the best of his or her knowledge, Wright has fulfilled the requirements
for New and Renewed Focus Arrangements under Section III.D.2 of the CIA;

          4. he or she has reviewed the Report and has made reasonable inquiry regarding its
content and believes that the information in the Report is accurate and truthful; and

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     E. Designation
of Information. Wright shall clearly identify any portions of its
submissions that it believes are trade secrets, or information that is commercial or financial and
privileged or confidential, and therefore potentially exempt from disclosure under the Freedom of
Information Act (FOIA), 5 U.S.C. § 552. Wright shall refrain from identifying any information as
exempt from disclosure if that information does not meet the criteria for exemption from
disclosure under FOIA.

VI.
Notifications and
Submission of Reports

     Unless otherwise stated in writing after the Effective Date, all notifications and reports
required under this CIA shall be submitted to the following entities:

	 	OIG:	 	Administrative and Civil Remedies Branch
 Office of
Counsel to the Inspector General
 Office of Inspector
General
 U.S. Department of Health and Human Services

Cohen Building, Room 5527
 330 Independence Avenue, S.W.

Washington, DC 20201
 Telephone:
202.619.2078
 Facsimile:
202.205.0604
	 
	 	Wright:	 	Lisa L. Michels, J.D., M.S.O.L.Q.

Vice President and Chief Compliance Officer
 5677
Airline Road
 Arlington, TN 38002
 Telephone:
901.867.4361
 Facsimile: 901.867.4332

Unless otherwise specified, all notifications and reports required by this CIA may be made by
certified mail, overnight mail, hand delivery, or other means, provided that there is proof that
such notification was received. For purposes of this requirement, internal facsimile confirmation
sheets do not constitute proof of receipt. Upon request by OIG, Wright may be required to provide
OIG with an electronic copy of each notification or

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report required by this CIA in searchable portable document format (pdf), either instead of
or in addition to, a paper copy.

VII.
Oig Inspection,
Audit, and Review Rights

     In addition to any other rights OIG may have by statute, regulation, or contract, OIG or its
duly authorized representative(s) may examine or request copies of Wright’s books, records, and
other documents and supporting materials and/or conduct on-site reviews of any of Wright’s
locations for the purpose of verifying and evaluating: (a) Wright’s compliance with the terms of
this CIA; and (b) Wright’s compliance with the requirements of the Federal health care programs in
which it participates. The documentation described above shall be made available by Wright to OIG
or its duly authorized representative(s) at all reasonable times for inspection, audit, or
reproduction. Furthermore, for purposes of this provision, OIG or its duly authorized
representative(s) may interview any of Wright’s employees, contractors, or agents who consent to be
interviewed at the individual’s place of business during normal business hours or at such other
place and time as may be mutually agreed upon between the individual and OIG. Wright shall assist
OIG or its duly authorized representative(s) in contacting and arranging interviews with such
individuals upon OIG’s request. Wright’s employees may elect to be interviewed with or without a
representative of Wright present.

VIII.
Document and Record
Retention

     Wright shall maintain for inspection all documents and records relating to reimbursement from
the Federal health care programs, or to compliance with this CIA, for six (6) years (or longer if
otherwise required by law) from the Effective Date.

IX.
Disclosures

     Consistent with HHS’s FOIA procedures, set forth in 45 C.F.R. Part 5, OIG shall make a
reasonable effort to notify Wright prior to any release by OIG of information submitted by Wright
pursuant to its obligations under this CIA and identified upon submission by Wright as trade
secrets, or information that is commercial or financial and privileged or confidential, under the
FOIA rules. With respect to such releases, Wright shall have the rights set forth at 45 C.F.R. §
5.65(d).

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X.
Breach and Default Provisions

     Wright is expected to fully and timely comply with all of its CIA obligations.

     A. Stipulated Penalties for Failure to Comply with Certain Obligations. As a contractual
remedy, Wright and OIG hereby agree that failure to comply with certain obligations as set forth
in this CIA may lead to the imposition of the following monetary penalties (hereinafter referred
to as “Stipulated Penalties”) in accordance with the following provisions.

          1. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day after the date
the obligation became due) for each calendar day Wright fails to establish and implement any of
the following obligations as described in Section III:

a.
a Compliance Officer; 

b. a Compliance
Committee;

 c. a written Code of Conduct;

d. written Policies and Procedures;

e. the training of Covered Persons and Arrangements Covered Persons;

f. the Focus Arrangements Procedures and/or Focus Arrangements Requirements
described in Sections III.D.1 and III.D.2;

g. a Disclosure Program;

h. Ineligible Persons screening and removal requirements;

i. notification of Government investigations or legal proceedings; and

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j. reporting of Reportable Events.

          2. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day
after the date the obligation became due) for each day Wright fails to engage an
IRO, as required in Section III.E and Appendix A.

          3. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day
after the date the obligation became due) for each day Wright fails to submit the
Implementation Report, documentation required under Section V.B., or any Annual
Reports to OIG in accordance with the requirements of Section V by the deadlines
for submission.

          4. A Stipulated Penalty of $2,500 (which shall begin to accrue on the day
after the date the obligation became due) for each day Wright fails to submit the
annual Arrangements Review Report in accordance with the requirements of Section
III.E and Appendix B.

          5. A Stipulated Penalty of $1,500 for each day Wright fails to grant access as
required in Section VII. (This Stipulated Penalty shall begin to accrue on the date
Wright fails to grant access.)

          6. A Stipulated Penalty of $5,000 for each false certification submitted by
or on behalf of Wright as part of its Implementation Report, Annual Report,
additional documentation to a report (as requested by the OIG), or otherwise
required by this CIA.

          7. A Stipulated Penalty of $10,000 (which shall begin to accrue on
the day after the date the obligation became due) for each day Wright fails to
cooperate and otherwise satisfy any of the obligations and requirements as described
in Section III.J.

          8. A Stipulated Penalty of $1,000 for each day Wright fails to comply fully and
adequately with any obligation of this CIA. OIG shall provide notice to Wright
stating the specific grounds for its determination that Wright has failed to comply
fully and adequately with the CIA obligation(s) at issue and steps Wright shall take
to comply with the CIA. (This Stipulated Penalty shall begin to accrue 10 days after
Wright receives this notice from OIG of the failure to comply.) A Stipulated Penalty
as described in this Subsection shall not be demanded for any violation for which OIG
has sought a Stipulated Penalty under Subsections 1-7 of this Section.

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     B. Timely Written Requests for Extensions.

     Wright may, in advance of the due date, submit a timely written request for an
extension of time to perform any act or file any notification or report required by this
CIA. Notwithstanding any other provision in this Section, if OIG
grants the timely written
request with respect to an act, notification, or report, Stipulated Penalties for failure
to perform the act or file the notification or report shall not begin to accrue until one
day after Wright fails to meet the revised deadline set by OIG. Notwithstanding any other
provision in this Section, if OIG denies such a timely written request, Stipulated
Penalties for failure to perform the act or file the notification or report shall not begin
to accrue until three business days after Wright receives OIG’s written denial of such
request or the original due date, whichever is later. A “timely written request” is
defined as a request in writing received by OIG at least five business days prior to the
date by which any act is due to be performed or any notification or report is due to be
filed.

     C. Payment of Stipulated Penalties.

          1. Demand Letter. Upon a finding that Wright has failed to comply with any of
the obligations described in Section X.A and after determining that Stipulated
Penalties are appropriate, OIG shall notify Wright of: (a) Wright’s failure to
comply; and (b) OIG’s exercise of its contractual right to demand payment of the
Stipulated Penalties (this notification is referred to as the “Demand Letter”). Such
Demand Letter shall specifically state the conduct that the OIG contends constitutes
the basis for imposing the Stipulated Penalty.

          2. Response to Demand Letter. Within 10 days after the receipt of the Demand
Letter, Wright shall either: (a) cure the breach to OIG’s satisfaction and pay the
applicable Stipulated Penalties or (b) request a hearing before an HHS administrative
law judge (ALJ) to dispute OIG’s determination of noncompliance, pursuant to the
agreed upon provisions set forth below in Section X.E. In the event Wright elects to
request an ALJ hearing, the Stipulated Penalties shall continue to accrue until
Wright cures, to OIG’s satisfaction, the alleged breach in
dispute. Failure to respond to the Demand Letter in one of these two manners
within the allowed time period shall be considered a material breach of this CIA and
shall be grounds for exclusion under Section X.D.

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          3. Form of Payment. Payment of the Stipulated Penalties shall be made by
electronic funds transfer to an account specified by OIG in the Demand Letter.

          4. Independence from Material Breach Determination. Except as set forth in
Section X.D.1.d, these provisions for payment of Stipulated Penalties shall not
affect or otherwise set a standard for OIG’s decision that Wright has materially
breached this CIA, which decision shall be made at OIG’s discretion and shall be
governed by the provisions in Section X.D, below.

     D. Exclusion for Material Breach of this CIA.

          1. Definition of Material Breach. A material breach of this CIA means:

          a. a failure by Wright to report a Reportable Event, take corrective action,
and make the appropriate refunds, as required in Section III.I;

          b. a repeated or flagrant violation of the obligations under this CIA,
including, but not limited to, the obligations addressed in Section X.A;

          c. a failure to respond to a Demand Letter concerning the payment of
Stipulated Penalties in accordance with Section X.C; or

          d. a failure to engage and use an IRO in accordance with Section III.E.
and Appendix A.

          e. a repeated or flagrant failure by Wright to cooperate in
accordance with Section III.J.

          2. Notice of Material Breach and Intent to Exclude. The parties agree that a
material breach of this CIA by Wright constitutes an independent basis for Wright’s
exclusion from participation in the Federal health care programs. Upon a
determination by OIG that Wright has materially breached this CIA and that exclusion
is the appropriate remedy, OIG shall notify Wright of: (a) Wright’s material breach;
and (b) OIG’s intent to exercise its contractual right to impose exclusion (this
notification is hereinafter referred

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to as the “Notice of Material Breach and Intent to Exclude”).

          3. Opportunity to Cure. Wright shall have 30 days from the date of receipt of
the Notice of Material Breach and Intent to Exclude to demonstrate to OIG’s
satisfaction that:

a. Wright is in compliance with the obligations of the CIA cited by OIG as
being the basis for the material breach;

b. the alleged material breach has been cured; or

c. the alleged material breach cannot be cured within the 30-day period,
but that: (i) Wright has begun to take action to cure the material
breach; (ii) Wright is pursuing such action with due diligence; and (iii)
Wright has provided to OIG a reasonable timetable for curing the material
breach.

          4. Exclusion Letter. If, at the conclusion of the 30-day period, Wright fails
to satisfy the requirements of Section X.D.3, OIG may exclude Wright from
participation in the Federal health care programs. OIG shall notify Wright in
writing of its determination to exclude Wright (this letter shall be referred to
hereinafter as the “Exclusion Letter”). Subject to the Dispute Resolution provisions
in Section X.E, below, the exclusion shall go into effect 30 days after the date
of Wright’s receipt of the Exclusion Letter. The exclusion shall have national effect
and shall also apply to all other Federal procurement and nonprocurement programs.
Reinstatement to program participation is not automatic. After the end of the period
of exclusion, Wright may apply for reinstatement by submitting a written request for
reinstatement in accordance with the provisions at 42 C.F.R. §§ 1001.3001-.3004.

     E. Dispute Resolution

          1. Review Rights. Upon OIG’s delivery to Wright of its Demand Letter or of
its Exclusion Letter, and as an agreed-upon contractual remedy for the resolution of
disputes arising under this CIA, Wright shall be afforded certain review rights
comparable to the ones that are provided in 42 U.S.C. § 1320a-7(f) and 42 C.F.R.
Part 1005 as if they applied to the Stipulated Penalties or exclusion sought
pursuant to this CIA. Specifically, OIG’s determination to demand payment of
Stipulated Penalties or to

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seek exclusion shall be subject to review by an HHS ALJ and, in the event of an appeal, the
HHS Departmental Appeals Board (DAB), in a manner consistent with the provisions in 42 C.F.R. §
1005.2-1005.21. Notwithstanding the language in 42 C.F.R. § 1005.2(c), the request for a hearing
involving Stipulated Penalties shall be made within 10 days after receipt of the Demand Letter and
the request for a hearing involving exclusion shall be made within 25 days after receipt of the
Exclusion Letter.

          2. Stipulated Penalties Review. Notwithstanding any provision of
Title 42 of the United States Code or Title 42 of the Code of Federal
Regulations, the only issues in a proceeding for Stipulated Penalties under this CIA
shall be: (a) whether Wright was in full and timely compliance with the obligations
of this CIA for which OIG demands payment; and (b) the period of noncompliance.
Wright shall have the burden of proving its full and timely compliance and the steps
taken to cure the noncompliance, if any. OIG shall not have the right to appeal to
the DAB an adverse ALJ decision related to Stipulated Penalties. If the ALJ agrees
with OIG with regard to a finding of a breach of this CIA and orders Wright to pay
Stipulated Penalties, such Stipulated Penalties shall become due and payable 20 days
after the ALJ issues such a decision unless Wright requests review of the ALJ
decision by the DAB. If the ALJ decision is properly appealed to the DAB and the DAB
upholds the determination of OIG, the Stipulated Penalties shall become due and
payable 20 days after the DAB issues its decision.

          3. Exclusion Review. Notwithstanding any provision of Title 42 of the
United States Code or Title 42 of the Code of Federal Regulations, the only
issues in a proceeding for exclusion based on a material breach of this CIA shall
be:

a. whether Wright was in material breach of this CIA;

b. whether such breach was continuing on the date of the Exclusion Letter;
and

c. whether the alleged material breach could not have been cured within the
30-day period, but that: (i) Wright had begun to take action to cure the
material breach within that period; (ii) Wright has pursued and is pursuing
such action with due diligence; and (iii) Wright provided to OIG within that
period a reasonable timetable for curing the material breach and Wright has
followed the timetable.

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          For purposes of the exclusion herein, exclusion shall take effect only after an
ALJ decision favorable to OIG, or, if the ALJ rules for Wright, only after a DAB decision in
favor of OIG. Wright’s election of its contractual right to appeal to the DAB shall not
abrogate OIG’s authority to exclude Wright upon the issuance of an ALJ’s decision in favor
of OIG. If the ALJ sustains the determination of OIG and determines that exclusion is
authorized, such exclusion shall take effect 20 days after the ALJ issues such a decision,
notwithstanding that Wright may request review of the ALJ decision by the DAB. If the DAB
finds in favor of OIG after an ALJ decision adverse to OIG, the exclusion shall take effect
20 days after the DAB decision. Wright shall waive its right to any notice of such an
exclusion if a decision upholding the exclusion is rendered by the ALJ or DAB. If the DAB
finds in favor of Wright, Wright shall be reinstated effective on the date of the original
exclusion.

          4. Finality of Decision. The review by an ALJ or DAB provided for above shall
not be considered to be an appeal right arising under any statutes or regulations.
Consequently, the parties to this CIA agree that the DAB’s decision (or the ALJ’s
decision if not appealed) shall be considered final for all purposes under this CIA.

XI.
Effective and
Binding Agreement

     Wright and OIG agree as follows:

     A. This CIA shall be binding on the successors, assigns, and transferees of
Wright;

     B. This CIA shall become final and binding on the later of (1) the date the final
signature is obtained on the CIA; or (2) the date the Civil Settlement Agreement becomes
effective.

     C. This CIA constitutes the complete agreement between the parties and may not be
amended except by written consent of the parties to this CIA;

     D. OIG may agree to a suspension of Wright’s obligations under this CIA based on a
certification by Wright that it is no longer providing health care items or services that
will be billed to any Federal health care program and that it does not have any ownership

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or control interest, as defined in 42 U.S.C. §1320a-3, in any entity that bills any Federal
health care program. If Wright is relieved of its CIA obligations, Wright will be required to
notify OIG in writing at least 30 days in advance if Wright plans to resume providing health care
items or services that are billed to any Federal health care program or to obtain an ownership or
control interest in any entity that bills any Federal health care program. At such time, OIG
shall evaluate whether the CIA will be reactivated or modified.

     E. The undersigned Wright signatories represent and warrant that they are
authorized to execute this CIA. The undersigned OIG signatory represents that he is
signing this CIA in his official capacity and that he is authorized to execute this
CIA.

     F. This CIA may be executed in counterparts, each of which constitutes an original
and all of which constitute one and the same CIA. Facsimiles of signatures shall
constitute acceptable, binding signatures for purposes of this CIA.

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On
Behalf of Wright Medical Technology, Inc.

	 	 	 
	/s/: GARY D. HENLEY

	 	9/22/10
	 

	 	 

	GARY D. HENLEY

President and Chief Executive Officer

Wright Medical Technology, Inc.

	 	DATE
	 

	 	 

	/s/: SANFORD V. TEPLITZKY, ESQ.

	 	9/22/10
	 

	 	 

	SANFORD V. TEPLITZKY, ESQ.

Ober, Kaler, Grimes & Shriver, P.C.

Counsel for Wright Medical Technology, Inc.

	 	DATE
	 

	 	 

	/s/: KAREN F. GREEN, ESQ. 
	 	9/23/10
	 

	 	 

	KAREN F. GREEN, ESQ. 

Wilmer Cutler Pickering Hale and Dorr LLP

Counsel for Wright Medical Technology, Inc.

	 	DATE

Wright Medical Technology, Inc. — Corporate Integrity Agreement

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On Behalf of the Office of Inspector General

of the Department of Health and Human Services

	 	 	 

	/s/: GREGORY E. DEMSKE 	 	9/29/10 
	 

	 	 

	GREGORY E. DEMSKE

Assistant Inspector General for Legal Affairs

Office of Inspector General

U. S. Department of Health and Human Services

	 	DATE

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APPENDIX A

INDEPENDENT REVIEW ORGANIZATION

This Appendix contains the requirements relating to the Independent Review Organization
(IRO) required by Section III.E of the CIA.

A. IRO Engagement.

     Wright shall engage an IRO that possesses the qualifications set forth in Paragraph C, of this
Appendix, to perform the responsibilities in Paragraph D, of this Appendix. The IRO shall conduct
the review in a professionally independent and objective fashion, as set forth in Paragraph E, of
this Appendix. Within 30 days after OIG receives the information identified in Paragraph B, of
this Appendix, OIG will notify Wright if the IRO is unacceptable. Absent notification from OIG
that the IRO is unacceptable, Wright may continue to engage the IRO.

     If Wright engages a new IRO during the term of the CIA, this IRO shall also meet the
requirements of this Appendix. If a new IRO is engaged, Wright shall submit the information
identified in Paragraph B, of this Appendix, to OIG within 30 days of engagement of the IRO.
Within 30 days after OIG receives this information, OIG will notify Wright if the IRO is
unacceptable. Absent notification from OIG that the IRO is unacceptable, Wright may continue to
engage the IRO.

B. Information Regarding the IRO.

	 	1.	 	identity, address, and phone number;
	 
	 	2.	 	a copy of the engagement letter;
	 
	 	3.	 	a summary and description of any and all current and prior engagements and agreements
between Wright and the IRO;
	 
	 	4.	 	the proposed start and completion dates of the Arrangements Review;
	 
	 	5.	 	a certification from the IRO regarding its professional independence and
objectivity with respect to Wright; and
	 
	 	6.	 	the professional qualifications of individuals assigned by the IRO to the engagement.

Wright Medical Technology, Inc. — Appendix A

1

 

C. IRO Qualifications.

The IRO shall:

     1. assign individuals to conduct the Arrangements Review engagement who are knowledgeable in
the requirements of the Anti-Kickback Statute and the regulations and other guidance documents
related to this statute; and

     2. have sufficient staff and resources to conduct the reviews required by the CIA on a timely
basis.

D. IRO Responsibilities.

The IRO shall:

     1. perform each Arrangements Review in accordance with the specific requirements of the
CIA;

     2. respond to all OIG inquiries in a prompt, objective, and factual manner; and

     3. prepare timely, clear, well-written reports that include all the information required by
Appendix B to the CIA.

E. IRO Independence and Objectivity.

     The IRO must perform the Arrangements Review in a professionally independent and objective
fashion, as appropriate to the nature of the engagement, taking into account any other business
relationships or engagements that may exist between the IRO and Wright.

F. IRO Removal/Termination.

     1. Provider. If Wright terminates its IRO during the course of the engagement, Wright must
submit a notice explaining its reasons to OIG no later than 30 days after termination. Wright must
engage a new IRO in accordance with Paragraph A, of this Appendix.

     2. OIG Removal of IRO. In the event OIG has reason to believe that the IRO does not possess
the qualifications described in Paragraph B, of this Appendix, is not independent and objective as
set forth in Paragraph E, of this Appendix, or has failed to carry out its responsibilities as
described in Paragraph D, of this Appendix, OIG may, at its sole discretion, require Wright to
engage a new IRO in accordance with Paragraph A of this Appendix.

Wright Medical Technology, Inc. — Appendix A

2

 

     Prior to requiring Wright to engage a new IRO, OIG shall notify Wright of its intent to do so
and provide a written explanation of why OIG believes such a step is necessary. To resolve any
concerns raised by OIG, Wright may request a meeting with OIG to discuss any aspect of the IRO’s
qualifications, independence
or performance of its responsibilities and to present additional information regarding these
matters. Wright shall provide any additional information as may be requested by OIG under this
Paragraph in an expedited manner. OIG will attempt in good faith to resolve any differences
regarding the IRO with Wright prior to requiring Wright to terminate the IRO. However, the final
determination as to whether or not to require Wright to engage a new IRO shall be made at the sole
discretion of OIG.

Wright Medical Technology, Inc. — Appendix A

3

 

Appendix B

 Arrangements Review

     The Arrangements Review shall consist of two components: a systems review and a transactions
review. The IRO shall perform all components of each Arrangements Review. If there are no
material changes to Wright’s systems, processes, policies, and procedures relating to
Arrangements, the Arrangements Systems Review shall be performed for the second and fourth
Reporting Periods. If Wright materially changes the Arrangements systems, processes, policies and
procedures, the IRO shall perform an Arrangements Systems Review for the Reporting Period in which
such changes were made in addition to conducting the systems review for the second and fourth
Reporting Periods. The Arrangements Transactions Review shall be performed annually and shall
cover each of the five Reporting Periods.

     A. Arrangements Systems Review. The Arrangements Systems Review shall be a
review of Wright’s systems, processes, policies, and procedures relating to the initiation,
review, approval, and tracking of Arrangements. Specifically, the IRO shall review the
following:

          1. Wright’s systems, policies, processes, and procedures with respect to creating and
maintaining a centralized tracking system for all existing and new and renewed Focus Arrangements
(Focus Arrangements Tracking System), including a detailed description of the information captured
in the Focus Arrangements Tracking System;

          2. Wright’s systems, policies, processes, and procedures for tracking remuneration to
and from all parties to Focus Arrangements;

          3. Wright’s systems, policies, processes, and procedures for tracking service and activity
logs to ensure that parties to the Focus Arrangement are performing the services required under
the applicable Focus Arrangement(s) (if applicable);

          4. Wright’s systems, policies, processes, and procedures for monitoring the use of leased
space, medical supplies, medical devices, equipment, or other patient care items to ensure that
such use is consistent with the terms of the applicable Focus Arrangement(s) (if applicable);

          5. Wright’s systems, policies, processes, and procedures for initiating Arrangements,
including those policies that identify the individuals with

Wright Medical Technology, Inc. — Appendix B

1

 

authority to initiate an Arrangement and that specify the business need or business rationale
required to initiate an Arrangement;

          6. Wright’s systems, policies, processes, and procedures for the internal review and
approval of all Arrangements, including those policies that identify the individuals required to
approve each type or category of Arrangement entered into by Wright, the internal controls designed
to ensure that all required approvals are obtained, and the processes for ensuring that all Focus
Arrangements are subject to a legal review by counsel with expertise in the Anti-Kickback Statute;

          7. the Compliance Officer’s annual review of and reporting to the Compliance Committee on
the Focus Arrangements Tracking System, Wright’s internal review and approval process, and other
Arrangements procedures;

          8. Wright’s systems, policies, processes, and procedures for implementing effective
responses when suspected violations of the Anti-Kickback Statute are discovered, including
disclosing Reportable Events and quantifying and repaying Overpayments when appropriate; and

          9. Wright’s systems, policies, processes, and procedures for ensuring that all new and
renewed Focus Arrangements comply with the Focus Arrangements Requirements set forth in
Section III.D.2 of the CIA.

     B. Arrangements Systems Review Report. The IRO shall prepare a report
based upon each Arrangements Systems Review performed. The report shall include the
following items:

          1. a description of the documentation (including policies) reviewed and personnel
interviewed;

          2. a detailed description of Wright’s systems, policies, processes, and procedures
relating to the items identified in Section A.1-9 above;

          3. findings and supporting rationale regarding weaknesses in Wright’s systems, processes,
policies, and procedures relating to Arrangements described in Section A.1-9 above; and

          4. recommendations to improve Wright’s systems, policies, processes, or procedures
relating to Arrangements described in Section A.1-9 above.

Wright Medical Technology, Inc. — Appendix B

2

 

     C. Arrangements Transactions Review. The Arrangements
Transactions Review shall consist of a review by the IRO of 50 randomly selected
Focus Arrangements that were entered into or renewed by Wright during the Reporting Period. The
IRO shall assess whether Wright has complied with the Focus Arrangements Procedures and the Focus
Arrangements Requirements described in Sections III.D.1 and III.D.2 of the CIA, with respect to
the selected Focus Arrangements.

     The IRO’s assessment with respect to each Focus Arrangement that is subject to review
shall include:

          1. verifying that the Focus Arrangement is maintained in Wright’s centralized tracking system
in a manner that permits the IRO to identify the parties to the Focus Arrangement and the relevant
terms of the Focus Arrangement (i.e., the items/services/equipment/space to be provided,
the amount of compensation, the effective date, the expiration date; etc.)

          2. verifying that the Focus Arrangement was subject to the internal review and approval
process (including both a legal and business review) and obtained the necessary approvals and
that such review and approval is appropriately documented;

          3. verifying that the remuneration related to the Focus Arrangement is properly
tracked;

          4. verifying that the service and activity logs are properly completed and reviewed
(if applicable);

          5. verifying that leased space, medical supplies, medical devices, and equipment, and
other patient care items are properly monitored (if applicable); and

          6. verifying that the Focus Arrangement satisfies the Focus Arrangements Requirements
of Section III.D.2 of the CIA.

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3

 

     D. Arrangements Transaction Review Report. The
Arrangements Transaction Review Report shall include the following information:

          1. Review Methodology.

	 	a.	 	Review Protocol: A detailed narrative description of the
procedures performed and a description of the sampling unit and universe
utilized in performing the procedures for the sample reviewed.
	 
	 	b.	 	Sources of Data: A full description of the documentation
and other information, if applicable, relied upon by the IRO in
performing the Arrangements Transaction Review.

          2. Review Findings. The IRO’s findings with respect to whether Wright has complied with the
Focus Arrangements Procedures and Focus Arrangements Requirements with respect to each of the
randomly selected Focus Arrangements reviewed by the IRO. In addition, the Arrangements
Transactions Review Report shall include observations, findings and recommendations on possible
improvements to Wright’s policies, procedures, and systems in place to ensure that all Focus
Arrangements comply with the Focus Arrangements Procedures and Focus Arrangements Requirements.

Wright Medical Technology, Inc. — Appendix B

4

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