United States settles $30 Million False Claims Act Kickback Allegations with Orthofix International NV

The Department of Justice announced today, Friday, November 2, 2012, that it entered a settlement with Orthofix International NV  (Orthofix) to settle allegations that its subsidiary, Blackstone Medical Inc., paid kickbacks to spinal surgeons to induce them to use the company’s spinal surgery products.  Blackstone Medical, Inc. is headquartered in Springfield, Massachusetts.  Orthofix is headquartered in Curacao, with its North American headquarters located in McKinney, Texas.  Through its subsidiaries, Orthofix manufactures and sells spinal implants and other spinal surgery products.

Blackstone Medical Inc., through its sales representatives, offered spinal surgeons a variety of kickbacks to convince them to purchase the company’s products.  The government’s complaint alleged that the doctors did not always use these products but always billed Medicare, Medicaid, TRICARE and other government health programs for such use.  The kickbacks included entering sham consulting agreements, wherein the surgeons received payments without providing any consultation services, sham royalty agreements and research grants.  The sales representatives also lavishly entertained the surgeons with dinners, travel, and entertainment.

As part of the $30 million dollar settlement, Orthofix also agreed to enter a corporate integrity agreement.  These agreements are usually five years in duration and require the company to put in place procedures, reviews and audits to avoid and/or promptly detect conduct similar to that alleged  in the settlement.

This case was brought to the government’s attention through the qui tam action filed by whistleblower Susan Hutcheson in the federal district court in Massachusetts:  United States ex rel. Hutcheson v. Blackstone Medical, Inc. et al.   As the whistleblower and under the provisions of the False Claims Act Ms. Hutcheson will receive $8 million as her share of the settlement.

Posted in Anti-Kickback Statute, False Certifications, False Claims, Federal False Claims Act, Government Intervention, Healthcare Fraud, Qui Tam, SettlementsNo Comments

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