Dallas based medical device manufacturer Orthofix Inc. has agreed to pay more than $34 million dollars to the federal government to settle civil and criminal charges stemming from fraudulent claims it made to Medicare and other federal health care programs. The company has also been ordered to pay a $7.8 million criminal fine. The settlement is part of an ongoing federal campaign to crack down on Medicare fraud which costs taxpayers an estimated $60-$90 billion each year.
Charges against Orthofix relate to practices surrounding the sale of bone growth stimulator devices. Charges brought against the company under the False Claims Act allege that Orthofix waived patient co-pays on the devices, resulting in overpayments by federal healthcare providers. The case against Orthofix also alleges that they gave doctors and their staffs kickbacks for promoting their products. As part of their settlement, Orthofix has agreed to enter into a corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services.
The False Claims Act is a federal law that places liability on individuals or corporations who defraud government programs like Medicare and Medicaid. The Act establishes liability for and prohibits each of the following behaviors:
1. Knowingly presenting a false claim for payment or approval
2. Knowingly making, using or providing a false statement or adding statement material to a known false or fraudulent claim
3. Conspiring to violate the False Claims Act
4. Making false certifications regarding property that is designated for government use
5. Certifying receipt of a document without properly verifying its truth
6. Buying government property from a known unauthorized agent
7. Knowingly making or using a false record to avoid or decrease payments or transmittances of property to the government
Since 2009, the Government has been particularly aggressive in pursuing False Claims Act cases against companies that have engaged in fraudulent practices against federal health care programs. To date, over $7.5 billion has been recovered by the government in these cases.
The Act also makes allowances for non-federal employees to act as whistleblowers and bring charges against people or companies engaged in fraudulent practices. When whistleblowers file claims under the provisions of the Act, they are eligible to receive a portion of any recovered damages (the amount usually equals 15-25% of the total sum).
The Orthofix case is an example of a whistleblower suit, with the original charges against the corporation having been brought by Jeffrey Bierman, co-owner of a Missouri based company which provides billing services and compliances to hospitals, nursing home and physicians. Because of his role in bringing the fraudulent actions to light, Bierman will receive $9.2 million as his portion of the civil settlement.