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Orthofix Whistleblower Lawsuit Leads to $43.4 M Settlement with DOJ

Orthofix International NV (NASDAQ: OFIX) agreed to pay $43.4  million to resolve a claim raised by a whistleblower, alleging that the company defrauded Medicare by paying kickbacks to doctors who used its bone- growth stimulators.  The person who blew the whistle on the company’s practices will receive $9.2 million of the settlement.  The company’s Orthofix Inc. unit will also plead guilty to a single felony count of obstructing a US government audit and pay a $7.8 million fine, according to a DOJ press release

Orthofix manipulated Certificates of Medical Necessity, an important form required by Medicare to be signed by a physician attesting that the bone growth stimulator was medically necessary. Medicare accounted for approximately 25% of Orthofix’s bone growth stimulator business. 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 without regard to the physician’s medical judgment about an individual patient’s estimated length of treatment, according to a DOJ press release.

Jeffrey  Bierman, who owns a Missouri company that provides billing services to doctors and hospitals, sued under the US False Claims Act qui tam.  The government later on joined Bierman’s suit after learning of the whistleblower suit’s allegations that Orthofix officials improperly waived patient co- payments, which wound up misstating the bone-stimulator’s true cost and generating Medicare overpayments, Stuart Delery, a Justice Department official, said in an e-mailed release. The company also paid kickbacks to doctors and their staffs in the form of “fitter fees” and referral fees, he said.

“The Justice Department has longstanding concerns about kickbacks and the routine waiver of co-payments, because they can impose significant costs on federal health programs that are not medically justified,” Delery said. 

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