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Orthofix Subsidiary to Pay $30 Million to Settle Medicare Kickback Allegations
In a shocking case of healthcare corruption, Orthofix International NV’s subsidiary, Blackstone Medical Inc., has agreed to pay the United States $30 million to settle allegations that it paid illegal kickbacks to physicians in order to induce use of the company’s products. The allegations were made under the False Claims Act, which authorizes private citizens to bring suit on behalf of the government for false claims for government funds.
According to the allegations, Blackstone Medical Inc. paid kickbacks to spinal surgeons in the form of sham consulting agreements, sham royalty arrangements, sham research grants, travel and entertainment. The kickbacks were allegedly used to induce the use of Orthofix’s spinal implants and other spinal surgery products.
“Kickbacks to physicians are incompatible with a properly functioning health care system,” said Stuart F. Delery, the Acting Assistant Attorney General for the Civil Division. “They can corrupt physicians’ medical judgment and cause misallocation of vital health care resources. Today’s settlement reflects the progress we are making in the ongoing fight against abusive and illegal practices in the healthcare industry.”
As part of the settlement, Orthofix also agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, which provides for procedures and reviews to be put in place to avoid and promptly detect conduct similar to that alleged in this matter.
The whistleblower in this case, Susan Hutcheson, will receive $8 million as her share of the settlement amount. This resolution is part of the government’s emphasis on combating health care fraud and another step for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced by Attorney General Eric Holder and Kathleen Sebelius, Secretary of the Department of Health and Human Services in May 2009.
“This settlement demonstrates the government’s continued resolve to ensure that patients receive, and the government pays for, health care that is based solely on sound medical judgment, not compromised by kickbacks,” said Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts. “We believe that this is a just and meaningful resolution that is in the best interests of the citizens of the Commonwealth and taxpayers across the nation.”
Defendant: Orthofix International NV’s subsidiary, Blackstone Medical Inc.
Criminal Charges: Allegations of Medicare kickbacks
City and State: Boston, Massachusetts
Exact Date: Today (no specific date provided)
Sentence or Outcome: $30 million settlement payment
Dollar Amount: $30 million
Whistleblower Share: $8 million
Key Facts
- State: Federal
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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