A North Texas medical equipment manufacturer has agreed to pay $42 million to the federal government to settle civil and criminal cases related to sales of bone growth stimulator devices.
However, the company will not be excluded from federal healthcare programs, including Medicare and Medicaid, despite a whistle-blower's accusations that it reaped $400 million from the scheme.Orthofix Inc. was accused of making false records and statements to get fake claims paid, misstating costs, waiving patient co-payments, paying kickbacks to doctors and staff, generating falsified medical documents and failing to tell patients that they could rent, rather than buy, the devices. It will pay more than $34.2 million to settle a lawsuit under the False Claims Act.Orthofix, based in Lewisville, also pleaded guilty in a related criminal case to a felony charge of obstruction of a federal audit and has been ordered to pay a fine of nearly $7.8 million.The whistle-blower's suit said the devices, called osteogenesis stimulators, cost about $50 to $100 to make and retailed at $5,000. The Medicare reimbursement was about $4,000.Most of the devices, the suit said, were "sitting idle in the homes of those patients, have been thrown out or otherwise disposed of. Osteogenesis stimulators are routinely listed for sale on eBay for as little as $50."In a form filed Thursday with the Securities and Exchange Commission, Orthofix said the settlement was not an admission of liability by the company or its subsidiaries.Brien T. O'Connor, a Boston attorney for Orthofix, said Thursday in a statement, "Orthofix is very pleased that it has reached formal agreements to resolve all issues associated with the government's investigation of sales of its bone growth stimulator devices."As part of the settlement, Orthofix agreed to enter into a corporate integrity agreement with the Health and Human Services Department's Office of Inspector General. Such agreements are made in exchange for the inspector general's not seeking to exclude companies from Medicare, Medicaid or other federal healthcare programs.The whistle-blower lawsuit was filed by Jeffrey J. Bierman, owner of a Missouri company. He will receive more than $9.2 million as his share of the civil settlement.Orthofix's guilty plea in the criminal case involved its failure to disclose information about its practices regarding certificates of medical necessity to a Medicare contractor during a June 2008 audit. Five employees, one from Lewisville, have pleaded guilty to crimes including paying kickbacks to doctors.This report includes material from The Associated Press.Darren Barbee, 817-390-7126Twitter: @DarrenBarbeeHave more to add? News tip? Tell us
