Deaf Today: Cochlear US Unit Receives Dept Of Justice Info Request

March 11, 2004

Cochlear US Unit Receives Dept Of Justice Info Request

From: Yahoo News - USA - Mar 11, 2004

SYDNEY (Dow Jones)--Australian ear-implant maker Cochlear Ltd. (A.COH) said late Thursday that its U.S. subsidiary, Cochlear Americas, has received a request for information from the U.S. Department of Justice.

"It is understood that Cochlear Americas is subject to an inquiry under federal health care laws in the U.S.A. that deal with the Medicare and Medicaid programs, including some with potential criminal sanctions," the company said in a statement.

It said that the DOJ has made no specific allegations. The request seeks a variety of documents, including those concerning Cochlear Americas' relationships with healthcare professionals.

Cochlear said that it intends to cooperate fully with the request, and has engaged a law firm with expertise in U.S. healthcare law.

"The costs associated with this inquiry will be material and cannot be quantified at this point, however will have a material impact in the current half," the company said.

"This is a serious matter, and we will be cooperating fully with the relevant authorities," Chief Executive Chris Roberts said in the statement. "As information becomes available, this will be communicated to the market where appropriate."

Roberts was appointed CEO on Feb. 1 and is currently in the U.S.

The announcement was made after the market close. Cochlear shares ended Thursday up 9 cents, or 0.4%, at A$22.57.

Last week, the head of Cochlear's Americas division, Jim Miller, resigned, leaving the company without a leader for its biggest business. The company makes about half its sales in the U.S.

Miller's surprise resignation came just weeks after Roberts said Cochlear was stepping up efforts to win back U.S. market share lost to rival Advanced Bionic Corp. by releasing new products.

Investors were unsettled by that news, sending Cochlear shares down 3.6%. But analysts said the fall was probably also due to a profit downgrade on the stock by Deutsche Bank, which cut Cochlear's rating to Sell from Hold on Tuesday partly due to the strong Australian dollar and poor profit outlook in the current second half ending June 30.