A former vice president of sales for Orthofix (NSDQ:OFIX) faces up to 5 years in prison after pleading guilty to federal charges that he helped run a scheme to pay doctors to use the company’s Spinal-Stim and Cervical-Stim bone growth stimulators.
Thomas P. Guerrieri, 51, of Youngstown, Ohio, yesterday copped to violating the Anti-Kickback statute in a Boston court. Had his case gone to trial, the feds would have proven that he set up a phony consulting deal with "Dr. S," 1 of Orthofix’s highest-prescribing customers, according to court documents. Orthofix paid out 10s of thousands of dollars to the physician in return for little or no work, according to federal prosecutors. The scheme also involved faking time sheets to make the deal seem legit, according to the documents; Guerrieri and a subordinate even went so far as to obtain a letter from Orthofix’s general counsel "indicating that the surgeon was compliant under his consulting agreement, which was not true," according to a press release.
"Guerrieri did these things to induce the surgeon to continue to order bone growth stimulators from the company," according to the release.
The former sales VP also pleaded guilty to charges that he facilitated a deal with a Rhode Island physicians assistant named Michael Cobb to pay him for each stimulator he ordered for the surgeon’s practice. After Orthofix banned payments to prescribing surgeons’ office in 2008, Guerrieri and his accomplices "devised a scheme where Cobb continued to be paid for each order, but the payments were made by a vendor of the device company, making it more difficult to trace the paper trail," according to the release. Cobb is also facing federal kickbacks charges.
In addition to up to 5 years behind bars, Guerrieri faces a possible fine of $250,000 and forfeiture, according to the feds. A sentencing hearing is slated for July 11.
Orthofix itself is working with prosecutors to settle a trio of federal beefs, including a probe into its bone growth stimulator business. In February the Lewisville, Texas-based orthopedic device maker said it was finalizing agreements to close criminal and civil matters related to that issue and possible violations of the Foreign Corrupt Practices Act and the False Claims Act.
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