BOSTON - A Rhode Island man was sentenced today in federal court for taking kickbacks.
Michael Cobb, 42, was sentenced by U.S. District Judge George A. O’Toole to one year incarceration (six months in prison, six months home confinement), to be followed by two years of supervised release and a $3,000 fine. Cobb was also ordered to forfeit $10,000 of proceeds from the offense to the federal government. Cobb pleaded guilty to violating the Anti-Kickback law on April 19, 2012.
Between 2004 and 2011, Cobb, a physician’s assistant, took kickbacks from Orthofix Inc., a medical device company, in return for ordering Orthofix’s device. Orthofix manufactures bone growth stimulators, which are externally-worn medical devices that emit electromagnetic waves that help regenerate bone cells. Cobb was a physician’s assistant for a neurosurgeon in Rhode Island who prescribed bone growth stimulators for patients who underwent spinal fusion surgery. The surgeon had no preference as to which company’s bone growth stimulator was used, believing that there were no clinical differences amongst the stimulators on the market. The surgeon left this decision to Cobb, who was in a position to direct the stimulator business to whichever medical device company he chose. Between 2004 and 2011, Orthofix paid Cobb for each bone growth stimulator that was ordered by the surgeon in payments ranging from $50 to $300. Cobb never disclosed to the surgeon that he was taking these payments, and the surgeon would not have authorized the arrangement. Cobb was paid approximately $120,000 between 2004 and 2011 for bone growth stimulator orders. In return, Cobb steered more than a $1 million of reimbursement from insurance carriers to Orthofix, including approximately $350,000 in payments from federal insurance carriers.
In addition, Cobb committed perjury during his testimony before a grand jury when he falsely denied that he was ever paid by a territory manager who worked for Orthofix, and he lied by testifying that the surgeon he worked for was aware of the financial arrangement. Cobb admitted that, through his perjury, he obstructed the government’s investigation, as part of his guilty plea.
In addition to the Cobb sentence, the investigation concerning Orthofix has to date resulted in a number of felony charges against Orthofix as well as company executives and employees, including the following:
- On July 23, 2012, a plea and sentencing hearing is scheduled with respect to Orthofix’s plea to obstructing a federal audit, in violation of 18 U.S.C. § 1516. Orthofix has agreed to pay over $42 million to resolve criminal and civil liability arising from the illegal promotion of its bone growth stimulators (U.S. v. Orthofix, 12-cr-10169-WGY);
- On December 14, 2011, Mitchell Salzman, pled guilty to perjury in violation of 18 U.S.C. §1623 while he was a Regional Manager for Orthofix (U.S. v. Salzman, 11-CR-10385-RWZ);
- On March 22, 2012, Derrick Field pled guilty to health care fraud in violation of 18 U.S.C. §1347 while he was a Territory Manager for Orthofix (U.S. v. Field, 12-CR-10057-JAT);
- On April 9, 2012, Thomas Guerrieri pled guilty to paying kickbacks in violation of 42 U.S.C. §1320a-7b while he was Vice President of Orthofix (U.S. v. Guerrieri, 12-CR-10061-RWZ);
- On May 11, 2012, Michael McKay pled guilty to health care fraud in violation of 18 U.S.C. §1347 while he was a Territory Manager for Orthofix (U.S. v. McKay, 12-CR-10129-DJC).
The investigation is ongoing.
United States Attorney Carmen M. Ortiz; Susan J. Waddell, Special Agent in Charge of the Department of Health and Human Services, Office of Inspector General; and Leigh-Alistair Barzey, Resident Agent in Charge of the Defense Criminal Investigative Service made the announcement today. The case was prosecuted by Assistant U.S. Attorney David S. Schumacher and Jeremy M. Sternberg of Ortiz’s Health Care Fraud Unit.
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