Between 2004 and 2008, Racey allegedly forged patient medical records and altered physician prescriptions in order to justify Medicare reimbursement for Physio-Stim use in otherwise non-covered cases.
The Physio-Stim system is an externally-worn device that emits electromagnetic fields to stimulate bone regeneration, primarily for patients undergoing spinal fusion procedures whose bones failed to heal properly.
Medicare covered use of the device only in patients with "nonunion of a long bone fracture," defined as a fracture that has stopped healing for at least 3 months, requiring written physician statements that testified to a lack of healing seen in radiographic imaging.
Racey, who was Orthofix’s territory manager for Pennsylvania, New Jersey and Delaware from April 2004 until he resigned in March 2011, collected physician statements and prescriptions for the Physio-Stim system and allegedly altered those that didn’t quite meet Medicare guidelines for reimbursement.
In one example, U.S. Attorney Zane David Memeger accused Racey of altering the dates of a patient’s injury, deleting physician statements that indicated that the injury was less than 3 months old and fabricating clinic visits that never took place.
Medicare paid more than $3,000 on that claim and Racey collected more than $500, according to the complaint
If found guilty, Racey may face more than $250,000 in penalties and a maximum possible sentence of 10 years imprisonment, according to a Dept. of Justice statement.