Healthcare Business News

Texas devicemaker to pay over $34 million in kickback case

By Maureen McKinney
Posted: June 7, 2012 - 5:15 pm ET

A Texas-based medical-device company has agreed to pay more than $34 million to settle allegations that it improperly waived patient co-payments, received overpayments from the federal government and paid kickbacks to physicians.

According to a news release from the Justice Department, Lewisville, Texas-based Orthofix “paid kickbacks to physicians and their staffs in the form of 'fitter fees,' referral fees and other comparable fees to induce the use” of the company's bone growth stimulator devices.

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“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,” said Stuart Delery, head of the Justice Department's civil division, in the release. “The resolution of this matter yielded a substantial recovery for taxpayers, and should deter other companies from engaging in such conduct in the future.”

The agreement stipulates that Orthofix did not admit liability by entering the settlement and that the company “expressly denies” the government's allegations. Orthofix officials could not be reached for comment.

Additionally, Orthofix agreed to plead guilty to a felony charge of obstruction of a federal audit, and to pay a fine of $7.8 million. The government alleged that Orthofix helped to falsify certificates of medical necessity by forging physicians’ signatures or by having Orthofix sales representatives fill out the forms.

In April, Thomas Guerrieri, Orthofix’s former vice president of sales, pleaded guilty to paying kickbacks to a physician’s assistant in order to boost sales of the company’s spinal bone growth stimulator device.

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