Orthofix VP Jailed for Paying Kickbacks

Last year, Orthofix agreed to pay the U.S. government $34 million to settle False Claims Act charges relating to its devices’ marketing. The company has also agreed to plead guilty to a felony federal audit obstruction charge and pay a $7.8 million criminal fine, according to a DOJ release.

According to the government, Guerrieri admitted that he paid kickbacks to two separate healthcare professionals, which is in violation of the Medicare Anti-Kickback Law. He did this in two separate transactions to induce bone growth stimulator orders from two of Orthofix’s highest-prescribing physicians. 

“First, Guerrieri facilitated a bogus ‘consulting’ agreement with a surgeon in New York,” the DOJ says. “The surgeon was paid tens of thousands of dollars but provided little or no consulting services in return. This surgeon failed to document his services in time sheets provided to the company, even though he was paid every month. During a meeting on 8/2007, the surgeon, Guerrieri, and another Orthofix employee hatched a scheme to create and backdate time sheets going back to 2006, making it appear as though the surgeon filled out these forms contemporaneously and performed legitimate consulting services. In addition, Guerrieri obtained a letter from the company’s general counsel indicating that the surgeon was compliant under his consulting agreement, which was not true.”

In addition, Guerrieri authorized kickbacks to pay a physician’s assistant in Rhode Island for each bone growth stimulator he ordered. For years, Orthofix paid the assistant $50–100 for each stimulator he ordered. Guerrieri, according to the government, also obstructed justice in connection with the investigation. In the midst of the investigation, Guerrieri instructed the sales force that if they were asked by investigators if they manipulated Medicare Certificates of Medical Necessity, they should lie and state that they had not done so. 

A whistleblower lawsuit alleged that Orthofix misstated the devices’ true cost, which “resulted in overpayments by federal programs; paid kickbacks to physicians and their staffs in the form of ‘fitter fees,’ referral fees, and other comparable fees, to induce the use of Orthofix products; caused the submission of falsified certificates of medical necessity; and failed to advise patients of their right to rent rather than purchase Orthofix products,” according to the DOJ. It notes that five Orthofix employees had previously pleaded guilty to criminal charges in connection with this matter.

As part of the settlement, Orthofix also agreed to a corporate integrity agreement with the HHS Office of Inspector General.

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