Orthofix Vice President Sentenced For Paying Medicare Kickbacks

BOSTON – The former vice president of sales of Orthofix, Inc. was sentenced yesterday for paying kickbacks to health care professionals.

Thomas P. Guerrieri, 52, was sentenced by U.S. District Judge Rya W. Zobel to eight months in prison and ordered to pay a fine of $20,000 and to forfeit $30,000. In April 2012, Guerrieri pleaded guilty to paying kickbacks.

Guerrieri, the former Vice President of Sales of Orthofix, Inc., admitted that he paid kickbacks to two separate health care professionals, in violation of the Medicare AntiKickback Law. Between 2001 and 2010, Guerrieri worked at Orthofix, first as a regional sales director, then area vice president, and, ultimately, the vice president of sales. Orthofix manufactured and distributed bone growth stimulator medical devices. Bone growth stimulators are used to assist spinal fusions and to help heal bone fractures that did not heal properly.

Guerrieri authorized kickbacks in two separate transactions in order to induce bone growth stimulator orders from two of Orthofix’s highest-prescribing physicians. First, Guerrieri facilitated a bogus “consulting” agreement with a surgeon in New York. The surgeon was paid tens of thousands of dollars but provided little or no consulting services in return. This surgeon failed to document his services in time sheets provided to the company, even though he was paid every month. During a meeting in August 2007, the surgeon, Guerrieri, and another Orthofix employee hatched a scheme to create and backdate time sheets going back to 2006, making it appear as though the surgeon filled out these forms contemporaneously and performed legitimate consulting services. In addition, Guerrieri obtained a letter from the company’s general counsel indicating that the surgeon was compliant under his consulting agreement, which was not true.

Second, Guerrieri authorized kickbacks to pay a physician’s assistant in Rhode Island, Michael Cobb, for each bone growth stimulator he ordered. Cobb was responsible for ordering bone growth stimulators for the surgeon who employed him. For years, Orthofix paid Cobb $50-$100 for each stimulator that he ordered. In September 2008, Orthofix issued a policy expressly prohibiting any payments to anyone who works for a surgeon that prescribes Orthofix products. Guerrieri was concerned that Orthofix would lose business if it could no longer pay Cobb. Thus, Guerrieri executed a scheme where Cobb continued to be paid for each order, but the payments were made by an Orthofix vendor, making it more difficult to trace the paper trail back to Orthofix. In July 2012, Cobb was sentenced to six months in prison and six months home confinement for accepting these kickbacks in addition to forfeiture of $40,000 and a $4,000 fine.
Guerrieri also obstructed justice in connection with the government’s investigation. In the midst of the investigation, Guerrieri instructed the sales force that, if they were asked by government investigators if they manipulated Medicare Certificates of Medical Necessity (CMNs), they should lie and state that they had not done so. Manipulation of CMNs was the conduct at issue in the recent Orthofix conviction, as described below.

In addition to the Guerrieri sentence, the Orthofix investigation has, to date, resulted in a number of felony charges against employees and contractors of Orthofix, including the following:

• In December 2012, Orthofix was convicted of obstruction of a federal audit, and ordered to pay $42 million in criminal fines and civil payments, and was sentenced to probation for five years;
• In January 2013, Derrick Field, a former Orthofix territory manager, was sentenced to five months of home confinement as part of a two-year probation sentence,
• In December 2011, Mitchell Salzman pleaded guilty while he was a regional manager for Orthofix;
• In May 2012, Michael McKay pleaded guilty to health care fraud while he was a territory manager for Orthofix; and
• In September 2012, Brian Racey pleaded guilty to health care fraud while he was a territory manager for Orthofix.
  

“Kickbacks corrupt medical decision-making and drive up health care costs for everyone,” said U.S. Attorney Carmen M. Ortiz. “Corporate executives have a responsibility to ensure that profits are not prioritized over patients’ health. This prosecution sends a message that, in the District of Massachusetts, we will investigate and prosecute those who commit health care fraud.”

“Company executives know that kickback payoffs have no place in healthcare,” said Susan J. Waddell, Special Agent in Charge, U.S. Department of Health and Human Services, Office of the Inspector General, New England Region. “So while Orthofix has already settled with taxpayers for more than $34 million, law enforcement will also pursue the corporate officials behind these schemes and make them pay a heavy price.”

“Orthofix corporation and its employees have recently pled guilty to a litany of felony criminal and civil charges related to illegal schemes that were purposefully designed to increase their profit,” said Richard DesLauriers, Special Agent in Charge of the Federal Bureau of Investigation Boston Field Division. “Like Orthofix, other health care corporations and their employees should know now that no one is immune from being held accountable for criminal and civil misconduct.”

“It is priority for DCIS to ensure the integrity of TRICARE, the Defense Department’s health care system for military members and their dependents,” said Leigh-Alistair Barzey, Resident Agent in Chage of the U.S. Department of Defense, Defense Criminal Investigative Service. “DCIS is committed to working with the U.S. Attorney’s Office, the FBI, HHS-OIG and our other partner agencies, to combat health care fraud, and this successful joint investigation is a result of that collaborative effort.”

This case was investigated by the U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations; the Federal Bureau of Investigation Boston Field Division; and the Department of Defense, Defense Criminal Investigative Service – Boston Resident Agency. It was being prosecuted by Assistant U.S. Attorneys David Schumacher and Jeremy Sternberg of Ortiz's Health Care Fraud Unit.