Another Scandal for Orthofix as Former Employee Sentenced for Medicare Fraud

Yet another former manager with Orthofix pled guilty to forging former patient medical records in an attempt to justify reimbursement for procedures involving bone growth products.

A federal judge ruled on the fate of a former Orthofix employee who has admitted to participating in years of patient record falsification. District Court Judge Joseph Tauro sentenced Derrick Field to five months of home confinement as part of a two-year probation sentence. He also must pay $4,000 in fines on top of a forfeiture of $40,000.

The former employee, Derrick Field, was an Orthofix manager between the years of 2005 and 2011. He admitted to falsifying more than 100 claims submitted to Medicare, defrauding Medicare of over $250,000 in reimbursements. Each of these claims was directly related to procedures utilizing Orthofix’s bone growth stimulator, according to an official statement from the United States Justice Department.

“Field created phony medical chart notes, describing patient visits that did not occur and altered the physicians’ actual chart notes by inserting false diagnoses and descriptions of the patients’ medical history,” according to the DOJ. “Medicare has specific rules describing when it will pay for this device. When Field received bone growth stimulator orders for Medicare patients that did not meet these rules, he forged the patients’ medical records to make it appear as though the order met the rules to induce Medicare to pay for claims that otherwise would not be covered.”

The suit against Field is only one in a very long list of official allegations against Orthofix, its former employees and a physician’s assistant who has also pled guilty to accepting kickbacks from Orthofix.

Last year, the company was convicted of obstructing a federal audit and a federal judge inBostonpenalized the company by slapping them with $43 million dollars in fines, along with a five-year probation period.

Making matters worse for the company, in September of 2012, a former territory manager for Orthofix, Brian Racey, pled guilty to healthcare fraud. Like Field, Racey was also charged with defrauding Medicare to the tune of $250,000 by forging patient records in order to justify Medicare payment for Orthofix’s Physio-Stim bone growth stimulator.

The 2012 sentencing of Racey was reached via a last-minute plea deal in which Orhtofix pled guilty to a single felony count of obstructing an audit and paid a $7.6 million criminal fine. In addition, the company agreed to settle a number of civil claims relating to the case that came up in a False Claims Act or whistleblower lawsuit. That cost Orthofix $34.2 million plus interest.

After the company’s plea deal in December, Orthofix president and CEO Robert Vaters noted that the company was attempting to boost their ethics practices as a result of the controversy in order to improve the their “ethical culture.”

Additional Orthofix Healthcare Fraud Cases

The Department of Justice also provided a list of additional Orthofix investigations. According to the agency, the following four separate cases are on file against the company:

• In December 2011, Mitchell Salzman pleads guilty while he was a regional manager for Orthofix.
• In April 2012, Thomas Guerrieri pleads guilty to paying kickbacks during the time he was vice president of Orthofix.
• In July 2012, Michael Cobb, a physician’s assistant, was sentenced to six months in prison, followed by another two years of supervised release, six months of which to be under home confinement. He was also ordered to pay $10,000 in forfeiture. Cobb had previously plead guilty to accepting kickbacks from Orthofix.
• In May 2012, Michael McKay pleads guilty to health care fraud while he was a territory manager for Orthofix.