Health-Care Workers Are Accused of Taking Bribes From MiMedx

(Bloomberg) -- MiMedx Group Inc. paid bribes to three Veterans Affairs Department health-care workers to promote the biotech firm’s products, federal prosecutors said.

Donna Becker, Marcela Dolores Farrer and Carol Guardiola, who provided wound care services to VA patients, were indicted by a federal grand jury in Greenville, South Carolina, on Tuesday. Prosecutors said they received payments, meals, gifts and other inducements that led to “the excessive use of MiMedx products.” Neither MiMedx nor any company officials were charged.

MiMedx shares tumbled 13 percent to $6.98 at 2:29 p.m. in New York. It’s the biggest drop since Feb. 20, when the firm announced it would delay its 2017 earnings report until it completes an internal review of certain sales and distribution practices. The shares have fallen by more than a third this year.

A MiMedx representative didn’t respond to multiple requests for comment. Farrer and Guardiola didn’t respond to messages sent via LinkedIn.

The Marietta, Georgia-based maker of tissue grafts is under investigation by the Securities and Exchange Commission into how it recognizes revenue, while the Justice Department is probing its distribution practices and whether it overcharged the government for its tissue-repair products.

MiMedx’s internal review followed a series of public allegations, and a vicious public battle with short-sellers, over how and when the company books some of its sales. About half of MiMedx shares available to trade were sold short as of April 13, according to data compiled by Bloomberg.

Becker got gift cards, meals and about $20,000 in fees for speaking engagements on behalf of MiMedx, hoping to increase sales to VA facilities, according to the indictment. Farrer received $12,200 from MiMedx, in part for promoting the firm’s allografts. Guardiola allegedly received meals and other gratuities from a MiMedx representative.

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