Whistleblower to Receive Over $9 Million in Medical Device Fraud Settlement

This summer, the DOJ announced that it had reached a $34 million settlement agreement with a Texas medical device manufacturer to settle a lawsuit brought under the False Claims Act. The company, Orthofix Inc., was accused of a number of fraudulent practices designed to promote sales of its products, violating federal laws designed to prevent wasteful Medicare and Medicaid spending. Jeffrey Bierman, a Missouri businessman whose company provides medical billing services, originally filed a qui tam lawsuit, which the government later joined. For his work in uncovering the fraud Bierman is set to earn over $9.2 million of the total $34 million civil recovery.

Orthofix’s False Claims Act violations relate to the sale of its bone growth stimulator devices used to promote bone fusion after spinal surgery. No one has alleged that the company’s products do not work properly, rather the government accused Orthofix of breaking the law in promoting the sale of its products. According to the government, the company waived patient co-payments with the result that the Medicare and Medicaid programs overpaid. It also gave illegal kickbacks to medical professionals to promote their products, caused physicians to falsely certify to the government that the stimulators were medically necessary, and kept information from patients about the possibility of renting equipment rather than purchasing it.

If true, all these acts would violate federal laws regulating medical care that is reimbursed by the federal government. When physicians provide care because of kickbacks or for any reason other than the legitimate medical needs of patients, the government and taxpayers are defrauded when they reimburse those costs. These are just the kinds of illegal acts against taxpayers that the False Claims Act was designed to prevent by giving incentives to whistleblowers to come forward with information about fraud.

In addition to paying the government to resolve the civil claims against it, Orthofix also agreed to pay over $7.7 million in criminal penalties, and a number of the company’s executives and employees have already entered guilty pleas to individual criminal charges. Recently, however, a judge rejected the company’s criminal plea agreement, throwing the civil agreement into some uncertainty as well. But whatever the exact outcome, it appears that Orthofix will be paying back quite a bit to the government, and to Mr. Bierman.

Orthofix’s settlement is just the latest in a ever-growing wave of healthcare fraud cases resolved through the work of whistleblowers and the Health Care Fraud Prevention and Enforcement Action Team (HEAT). In 2009, HEAT was announced by the Department of Justice and the Department of Health and Human Services as a partnership designed to root out healthcare fraud by combining the specialties of the two agencies.

Since HEAT’s formation in 2009, healthcare fraud cases are up 78% and have come to dominate the government’s False Claims Act case load. In those three-and-a-half years alone, HEAT has recovered more than $11 billion of taxpayer funds, with substantial portions of those recoveries being paid out to the whistleblowers who often bring fraud to the government’s attention. If you have evidence of fraud against the government, an experienced whistleblower attorney can help you increase your chances of a significant reward for stepping forward.

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