Orthofix (NSDQ:OFIX) allegedly participated in a scheme to defraud Medicare and state health programs with a kickbacks scheme designed to lure doctors into using the company’s neurological monitoring devices during orthopedic surgeries, according to a whistleblower lawsuit unsealed this week.
The lawsuit, revealed August 8 in the U.S. District Court for Middle Florida, alleges that Orthofix and its Blackstone subsidiary, a hospital and 2 doctors bilked the system by filing reimbursement claims for services that were never performed or were performed by unauthorized personnel.
Jason Schiff, the whistleblower, was asked to bid on a contract with the Parrish Medical Center in Florida to provide intraoperative neurophysiological monitoring services. In researching his bid, Schiff alleges, he discovered that a Blackstone sales rep named Mark Blair and Drs. Ara Jason Deukmedjian and Bharat Patel were using technology "so outdated it could not [emphasis theirs] make a real-time Internet connection," meaning no doctor was actually monitoring patients’ neurological activity during procedures.
"As a result, literally thousands of fraudulent IOM billings were submitted to Medicare / Medicaid and other government programs by the defendants, including and especially the ‘reading doctor,’ in most instances, Patel," according to the lawsuit. "There was no real-time reading of IOM data, Blair did not communicate telephonically with Patel from the operating room and Patel was not present at the hospital to read the IOM data in person."
Blair was also seen allegedly giving a cash-stuffed envelope to Deukmedjian and was later heard to brag that "it cost me over 20k to get Deuk’s business – but it was worth it,” according to the lawsuit. Parrish Medical Center and its administrators knew of the alleged arrangement between Blair and Deukmedjian, whose wife Sun Deukmedjian also allegedly participated in the scheme.
The lawsuit seeks a jury trial, a cease and desist order against the defendants’ allegedly illegal scheme, triple damages, civil penalties including $26,000 for each false claim and legal fees. Schiff is entitled to as much as 25% of any proceeds from the case.
