Ex-Orthofix VP pleads guilty over kickback

Orthofix International's ($OFIX) former vice president of sales has pleaded guilty in federal court to violating the Anti-Kickback law over the sale of bone growth stimulators. And now Thomas Guerrieri faces up to 5 years in prison.

The 51-year-old Youngstown, OH, resident will be sentenced July 11, according to the U.S. attorney's office. He could also face three years probation and a $250,000 fine, the government notes. Meanwhile, his plea hearing is scheduled for April 19.

Federal prosecutors say they would have proven Guerrieri helped bring a New York surgeon into a bogus consulting agreement with the orthopedic devicemaker to encourage him to use the company's bone growth stimulator products. The surgeon in question made "tens of thousands of dollars" from the company while performing "little or no consulting services in return," the prosecutors note in the plea announcement.

Guerrieri was also alleged to have worked with another salesperson to backdate time sheets to address concerns about government scrutiny over related consulting deals. They were alleged to have falsely obtained a letter "from the company's general counsel indicating that the surgeon was compliant under his consulting agreement," according to a press release from the prosecutor's office. Additionally, prosecutors say, Guerrieri was charged with violating the Anti-Kickback law.

Separately, Guerrieri and others allegedly put together a deal to pay a Rhode Island physician's assistant for each bone growth treatment he ordered for his surgeon's practice. But after his company banned the practice of paying people who work for surgeons prescribing its products, Guerrieri and others allegedly continued the deal through a separate vendor so the payments could not be easily traced.

Bad publicity for Orthofix is far from over. The company is separately negotiating with prosecutors over other alleged violations, including "criminal and civil matters" regarding its bone growth stimulator business, as MassDevice points out. The company's stock has dropped about 6% over the last week, closing at $35.59 April 10.

- here's the U.S. attorney's office release
- read MassDevice's coverage
- check out Law360's take (subs. req.)
- read Orthofix's announcement on prior legal issues