Orthofix Back To The Drawing Board As Judge Rejects Settlement

Orthofix’s proposed $7.8 million settlement in a Medicare kickback investigation has been rejected by U.S. District Judge William G. Young.  Orthofix had proposed pleading guilty to one count of obstructing a government audit and paying a $7.8 million fine.  In rejecting the settlement, Judge Young stated that he had unease in treating a corporate criminal case as a civil case and that the settlement unduly restricted his sentencing power.  A $34.2 million settlement that Orthofix had proposed to resolve False Claim Act allegations that the company paid kickbacks to doctors who used their bone growth stimulator is now in jeopardy.

Five employees of Orthofix have already pled guilty to criminal charges arising from the whistleblower investigation kicked off by Relator Jeffrey Bierman’s allegations.  One high ranking Orthofix employee, Thomas Guerrieri, Vice President, pled guilty to creating fake consulting agreements for physicians.  One physicians’ assistant in Rhode Island pled guilty to receiving approximately $120,000 in kickbacks from Orthofix.  He was sentenced to six months in prison and six months of home confinement and paid $13,000 in fines.

The government also alleges that Orthofix waived patient co-pays for the bone growth stimulator, which misstated the true cost of the product and generated a Medicare overpayment.  Orthofix is also accused of submitting claims that patients needed to purchase the devices rather than rent them.  Relator Bierman, who provides billing services to physicians and hospitals, was to receive $9.2 million of the proposed $34.2 million settlement.

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