In 2006, the government was investigating almost all the major orthopedics makers for allegedly giving kickbacks to doctors to encourage them to use each company's brand of replacement joints. While fellow orthopedic implant makers Zimmer
But the Dept. of Health & Human Services kept investigating Stryker, issuing a subpoena for numerous documents allegedly pertaining to kickbacks and improper Medicare and Medicaid reimbursement claims.
It seems that Stryker's finally had enough. More than 300,000 pages worth of documents later, the company has decided to fight back against both DHHS and the Dept. of Justice. Perhaps that's not the wisest move, but what else is it supposed to do? I'm sure the costs of complying with the subpoena, in both time and money, have been an unwanted burden.
Remember, Stryker's also spending $50 million per year over the next few years to deal with problems related to three Food and Drug Administration warning letters over quality-control issues. Additional costs for what it considers overly broad investigations certainly don't help.
Luckily for Stryker, it's had more trouble dealing with the government than selling its wares. The company has managed 30 consecutive quarters of double-digit growth. Bear market or not, investigations or not, you've got to admit that's impressive. One way or another, Stryker will end this investigation -- at least one analyst believes it'll end up settling -- and get back to more the business of stellar growth.
Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Johnson & Johnson is a selection of the Income Investor newsletter. The Fool owns shares of Stryker. The Fool's disclosure policyloved the movie Airplane.