Orthofix International NV to Pay $42 Million to Settle Felony Bone Growth Charges

Published: Jun 08, 2012

BOSTON, Jun 07, 2012 (BUSINESS WIRE) -- In the first of a series of whistleblower cases against the five US manufacturers of medical devices known as non-invasive bone growth stimulators, Orthofix International NV has agreed to pay the United States government $42 million to settle civil and criminal charges relating to its marketing and sale of the devices to Medicare and other federal health plans. The Department of Justice announced the settlement today. The settlement was the result of a whistleblower lawsuit filed by the Manhattan-based law firm Getnick & Getnick LLP on behalf of Jeffrey Bierman, a Midwest health care consultant who brought the allegations to the government's attention in 2003.

Mr. Bierman will receive a 27% share of the civil recovery of $34.23 million. This is at the very top end of the statutory range allowed by the whistleblower law, known as the federal False Claims Act. This law allows a private citizen with knowledge of fraud on the government to sue on the government's behalf and receive a share of the proceeds. Orthofix Inc., a subsidiary of Orthofix International NV, will plead guilty to a federal crime and pay the United States a $7.77 million fine in connection with the settlement.

Non-invasive bone growth stimulators are supposed to help bones heal by applying a weak electrical current or ultrasonic wave to a fracture or surgical site. They are worn by patients over a cast, brace or clothing for between two and six months in most cases. Medicare pays approximately $4,000 to purchase each device, which costs about $100 to manufacture. The settlement alleges that Orthofix falsified Certificates of Medical Necessity and other documents supporting claims to Medicare and gave kickbacks to doctors, their staff, patients, and independent sales agents in order to get orders for the devices. It alleges that Orthofix failed to comply with a Medicare requirement that suppliers advise patients of a monthly rental option rather than have the government pay the $4,000 purchase price for a new device every single time. Rental would have saved Medicare millions of dollars on devices that were used for only a few months. The settlement further alleges that Orthofix routinely waived the patient's 20% co-payment of approximately $800 in order to get patients who might otherwise refuse the devices because of the high cost to accept them, and then overcharged for the devices when making claims to Medicare.

Similar allegations are made in ongoing cases against the four other manufacturers -- Biomet, Inc., DJO Incorporated, Orthologic Corp. (a predecessor company of DJO), and Smith & Nephew, Inc. Neil Getnick, managing partner of Getnick & Getnick LLP, said these cases are being vigorously pursued. "The business models of the makers of bone growth stimulators are strikingly similar," he said. "Not only has Medicare been grossly overcharged, but the industry is plagued by kickbacks, falsified medical records and other illegal conduct designed to get orders and get claims paid. Medicare has lost hundreds of millions of dollars to fraud, and we intend to recoup that as we move forward with the remaining defendants."

Co-lead counsel for the whistleblower at Getnick & Getnick LLP were Mr. Getnick and partner Lesley Ann Skillen, assisted by partners Judge Margaret Finerty and Richard Dircks, counsel Stuart Altschuler, counsel Michael Getnick and Patrick Radel of Getnick Livingston Atkinson & Priori LLP, counsel Professor G. Robert Blakey, counsel Jon Cuneo and Pamela Gilbert of Cuneo, Gilbert & LaDuca LLP, and Boston counsel Scott Tucker of Tucker, Heifetz & Saltzman LLP. The government's team included Assistant U.S. Attorneys Zachary Cunha, Shannon Kelley, Jeremy Sternberg and David Schumacher of the Boston U.S. Attorney's Office and Department of Justice Trial Attorney David Cohen.

Getnick & Getnick LLP is a Manhattan-based law firm, focusing on business integrity and anti-fraud litigation, including:

* Major qui tam whistleblower cases. The firm's lawsuit against GlaxoSmithKline on behalf of a former GSK Manager of Global Quality Assurance resulted in a $750 million civil/criminal settlement in 2010 for distributing adulterated drug products. A case against Bayer Corporation for Medicaid drug pricing fraud, in which they represented a Bayer marketing executive, resulted in a $257 million recovery in 2003. The firm's lawsuit against Laboratory Corporation of America, in which they represented a North Carolina doctor, led to a $182 million recovery in 1996.

* Representing individuals and companies victimized by business crime.

* Corporate integrity monitoring and compliance counseling. Public and privately held companies retain the Getnick firm to undertake internal investigations and monitor their operations. The firm was one of four integrity monitors selected by the City of New York for the World Trade Center site cleanup, monitoring the activities and financial requisitions of contractors and subcontractors.

SOURCE: Getnick & Getnick LLP

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