Orthofix (NSDQ:OFIX) agreed to plead guilty to a felony obstruction charge and to fork over nearly $42 million to settle a federal case accusing it of illegally promoting its bone-growth stimulators.
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, according to a press release from the office of the U.S. attorney for Massachusetts.
"Orthofix manipulated these certificates of medical necessity in a number of different ways, including: (a) having Orthofix sales representatives fill out the entire form, including the medical necessity section; (b) forging physicians’ signatures in the section of the form certifying the physician’s belief that the device was medically necessary; (c) filling out or improperly coaching the physicians’ staff to fill out the estimated length of need field as ‘9 months’ for every patient," according to the release.
The company pleaded guilty to concealing the scheme during a 2008 Medicare audit. Orthofix agreed to pay a criminal fine of nearly $7.7 million and another $34.2 million plus interest, but admitted no wrongdoing in the civil portion of the qui tam whistleblower case. The whistleblower, Jeffrey Bierman, will pull down a bit more than $9 million from the settlement, according to the U.S. attorney’s office.
"Relator Bierman participated substantially in the development of the investigation that gave rise to the civil settlement," according to the release.
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 201. 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.
