Whistleblower Paid $9,243,251 For Exposing False Claims Scheme

On June 7, 2012, the Department of Justice reported that it had recovered $34,234,263 from Orthofix Inc., a Texas-based manufacturer of medical devices, to settle allegations under the civil False Claims Act relating to the company’s sale of bone growth stimulator devices. The Justice Department awarded whistleblower Jeffrey Bierman $9,243,251 for his contribution in providing the U.S. Government with insider information on the false claims scheme. The Justice Department also announced that the company had agreed to plead guilty to a felony of obstruction of a federal audit and to pay a $7,765,737 criminal fine.

The whistleblower suit alleged that the “company improperly waived patient co-payments, thus misstating their true cost and resulting 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.”

Stuart F. Delery, Acting Assistant Attorney General for the Civil Division stated that “the Justice Department has longstanding concerns about kickbacks and the routine waiver of co-payments, because they can impose significant costs on federal health programs that are not medically justified.” “The resolution of this matter yielded a substantial recovery for taxpayers, and should deter other companies from engaging in such conduct in the future.”

The Justice Department stated that the company’s criminal guilty plea involved its failure to disclose information concerning its practices regarding certificates of medical necessity to a Medicare contractor where five individual Orthofix employees previously plead guilty to criminal charges in connection with this matter. U.S. Attorney for the District of Massachusetts,Carmen M. Ortiz, stated that “this resolution, and the entire investigation, which has involved prosecution of a number of individuals, including a high level executive, demonstrates the government’s unflagging commitment to prosecuting corporate and individual medical device fraud, and particularly to protecting Medicare from those who prey on it by fraudulent means.”

Susan J. Waddell, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Health and Human Services New England region stated that “criminals intent on placing profits from federal health programs over and above compliance should expect to tangle with authorities” and that “Orthofix blatantly ordered sales staff to disregard Medicare rules, and conveniently looked away when medical records were altered and even forged.”

The False Claims Act allows private citizens to act as whistleblowers and sue on behalf of the government and share in the amounts the government recovers through legal action.The False Claims Act allows the government to recover treble damages and $5,500 to $11,000 for each false or fraudulent claim filed. The whistleblower in this case was paid approximately 27% of the proceeds from the government settlement.Whistleblower rewards typically range from between 15-30% for claims brought under the False Claims Act.

Young Law Group, P.C., Attorneys-at-Law, represents whistleblowers nationwide. For a free confidential consultation, please call Eric L. Young, Esquire at 1-800-590-4116 or email to eyoung@young-lawgroup.com.

SOURCE: http://www.justice.gov/opa/pr/2012/June/12-civ-724.html