Judge nixes $42M Orthofix, Justice Dept. settlement


A federal judge in Boston yesterday put the kaibosh on a $42 settlement deal between Orthofix (NSDQ:OFIX) and the U.S. Justice Dept. over charges that the medical device company illegally promoted its bone-growth stimulators.

Judge William Young of the U.S. District Court for Massachusetts rejected the proposed deal during a hearing yesterday, saying the agreement would limit his ability to impose further penalties, according to Bloomberg BusinessWeek.

"It seems in this case the court’s hands ought not be tied," Young said, according to the website. "I have extreme unease of treating corporate criminal conduct like a civil case."

Orthofix president & CEO Robert Vaters said the company is still working with DoJ lawyers to put the case to bed.

"The company and the government stand behind their agreements and continue to discuss a resolution of the matter following the court’s rejection of the plea," Vaters said in prepared remarks. "We remain confident that this matter will be resolved amicably and in a manner that is in the best interests of our shareholders."

In June, Orthofix and federal prosecutors agreed to the deal, which would have seen the company cop to a felony obstruction charge and fork over $42 million.

The government alleges that Orthofix sales reps falsified the certificates of medical necessity required for Medicare reimbursement for its Spinal-Stim, Cervical-Stim and Physio-Stim bone-growth stimulators.

The company agreed to plead guilty to concealing the scheme during a 2008 Medicare audit. The settlement would have included a criminal fine of nearly $7.7 million and another $34.2 million plus interest, but no admission of wrongdoing in the civil portion of the case.

The whistleblower, Jeffrey Bierman, was slated to pull down a bit more than $9 million from the settlement.

In February, Lewisville, Texas-based Orthofix said it was close to a deal with the feds over the case. In April, a former sales VP pleaded guilty to helping run a scheme to pay doctors to use the Spinal-Stim and Cervical-Stim devices.

The U.S. attorney’s office said the case resulted in charges against other Orthofix employees and contractors. A former regional sales director, Mitchell Salzman, pleaded guilty to making a false declaration to a federal grand jury in December 2011. Two territory managers, Derrick Field and Michael McKay, pleaded guilty this spring to falsifying patients’ records, and a physician’s assistant named Michael Cobb copped guilty to accepting kickbacks for ordering the stimulators.

RSS From Medical Design & Outsourcing

  • 3-phase current transducer from PEM delivers all-in-one convenience
    The new RCTrms 3-ph current transducer from Power Electronic Measurements (PEM) delivers a convenient, safe and accurate solution for measuring current in three phases. It features a thin, clip-around, flexible sensor coil and provides accurate true rms measurement with 4-20 mA or 0-5 V output, enabling simple installation with PLC’s, SCADA systems or automation equipment. […]
  • Safety alert: Recall on two IV solutions from Baxter
    Baxter International announced it is voluntarily recalling two lots of intravenous (IV) solutions to the hospital and user level due to the potential presence of particulate matter. The particulate matter in each case was determined to be an insect and was identified as a result of a customer complaint. The matter was identified prior to […]
  • TSO3 begins shipment of STERIZONE VP4 Sterilizers to U.S.
    TSO3, a developer in sterilization technology for medical devices in healthcare settings, announced that the company has received purchase orders for multiple devices from the U.S. The orders are the result of the collaborative relationship between Getinge Infection Control, its sales and service provider, and TSO3. “Finally,” said R.M. Rumble, president and CEO of TSO3. “Our Vision is […]
  • Turkish medical company is seeking reseller and OEM partners in the U.S.
    UZUMCU Medical Equipment, one of Turkey’s first and largest manufacturers of medical devices, is seeking reseller and OEM partners in the U.S. The company has an array of FDA-certified OR tables, surgical lights, surgical suction units, electro devices and other medical equipment. “We want to bring our experience with distributors throughout Europe and the Middle […]
  • QImaging introduces new CCD cameras for microscopy with modern software to streamline image capture
    QImaging, a manufacturer of scientific cameras for life science and OEM applications, introduces a new series of Retiga CCD cameras, accompanied by QImaging’s new acquisition software to deliver high-performance tools for microscopy and imaging to researchers at an affordable price. The new QImaging Retiga R1, Retiga R3 and Retiga R6 cameras offer valuable technical features […]
  • Sigma-Aldrich announces a new certification to aid IVD customers
    Sigma-Aldrich, a life science and high technology company, announced the company has received ISO 13485 certification for expanded quality assurance capabilities at its Dekalb and Barton facilities located in St. Louis. The certification extends Sigma-Aldrich’s ability to manufacture and offer critical raw materials, such as enzymes, proteins and antibodies used in diagnostic assays, and supplies in vitro […]
  • Prescribing the right power supply: Important considerations for using batteries to power medical devices
    Sol Jacobs, VP and General Manager, Tadiran Batteries Medical technology is advancing rapidly, requiring increasingly sophisticated power management solutions, especially when then the device needs to be self-powered. Battery-powered medical devices encompass a wide range of applications, including surgical drills, power tools, automatic external defibrillators (AEDs), infusion pumps, bone growth stimulators and other wearable devices, […]
  • Qosina announces the launch of its e-commerce website
    Qosina is pleased to announce the launch of its e-commerce website, making it easier to purchase thousands of medical device components from stock inventory. Visitors coming to the new Qosina.com will discover a new look and feel and improvements with every click including: · Easy navigation: A new category structure that mirrors the print catalog […]
  • Athermal laser machining for medical implants is the topic of Norman Noble’s latest whitepaper
    Thermal lasers have achieved extraordinary results in microprecision manufacturing of medical implants and devices the past 20 years. Devices we take for granted today, such as vascular stents, could not be produced without the technology; however, there are still significant limitations on what medical implant and device manufactures can produce using thermal lasers. One major issue […]
  • Sealevel announces the SeaISO family of USB isolators
    Sealevel announces the SeaISO family of USB isolators with 4 kV of medical-grade optical isolation between the host computer and connected USB equipment. SeaISO USB isolators are UL Recognized, in accordance with EN60601-1 3rd Edition, and protect both the power and data lines of connected USB devices from harmful ground loops, damaging transients and surges […]
  • The 21st Century Cures Discussion document recently released to the public
    It has been reported that among the 10,000 known diseases, 7,000 of which are considered rare, there are treatments for only 500. According to Dr. Francis Collins, Director of the National Institutes of Health (NIH), it now takes “around 14 years and $2 billion or more” to develop a new drug and “more than 95% […]

Leave a Reply