After a judge's last-minute protestations nearly derailed a plea deal, Orthofix International ($OFIX) has finally resolved long-standing Medicare fraud and kickback charges relating to how the company sold its bone growth stimulators.
U.S. District Judge William G. Young in Boston rejected the $43 million plea agreement twice, most recently late last week after saying the deal improperly restricted his sentencing powers. But Bloomberg, citing comments from a U.S. Attorney's office spokeswoman, reports that Young had a change of heart after the company agreed to an added punishment: 5 years of probation.
The Curaçao-based company announced on Dec. 17 that the deal was done. President and CEO Robert Vaters said in a statement that the company has made a major effort to boost its ethics practices as an outgrowth of the whole controversy.
"We have made significant investments in compliance and have made many organizational changes to enhance the ethical culture" at Orthofix, he said.
The deal requires Orthofix to plead guilty to a single felony count of obstructing an audit, and to fork over a $7.6 million criminal fine, Bloomberg reports. In addition, the agreement resolves a number of civil claims; Orthofix will pay $34.2 million, plus interest, to settle a number of civil claims brought to light in a whistleblower lawsuit.
Orthofix came under fire initially for allegedly committing Medicare fraud by encouraging doctors to use its bone growth stimulator products by using kickbacks. The company's announcement of the settlement notes that it is the third resolution of a corruption case this year. Orthofix not that long ago resolved another kickback case involving its Blackstone subsidiary. In that case, an ex-regional manager sued the company, alleging it paid doctors to use Blackstone products. The suit alleged that in one instance, prostitutes and strippers were brought into play to help make the sale.
- read the Bloomberg story
- here's the release
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