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Department of Justice
U.S. Attorney’s Office
District of Massachusetts

Thursday, January 31, 2013

Former Orthofix Regional Director Sentenced For Perjury

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BOSTON – A former Orthofix regional sales director was sentenced today for making a false declaration to a grand jury.

Mitchell Salzman, 47, was sentenced by U.S. District Court Judge Rya W. Zobel to one year of probation including three months of home detention and a $2,000 fine. In December 2011, Salzman pleaded guilty to making a false declaration to a grand jury.

Salzman admitted that he had lied to a grand jury about his role in doing business with a former Orthofix representative who had been terminated for falsifying medical records. Salzman was a regional sales director in the spine division at Orthofix, Inc. Orthofix manufactures bone growth stimulators that are used to help regenerate bone cells in connection with spinal fusions. In the summer of 2009, Orthofix fired a territory manager in Salzman’s region after discovering that the territory manager was falsifying medical records to induce Medicare to pay for stimulators that were outside of Medicare’s guidelines. Salzman and others were concerned that this termination would result in lost business. Therefore, Salzman and others executed a scheme whereby the territory manager continued to obtain stimulator orders in the territory, and Orthofix continued to pay commissions to the territory manager, through a front company established by the territory manager. Salzman was involved with these negotiations, including facilitating the agreement between Orthofix and the front company.

In 2011, Salzman testified before the grand jury related to Orthofix business practices pursuant to a grant of judicial immunity. Salzman was asked a number of questions about the arrangement between Orthofix and the territory manager and Salzman repeatedly lied to the grand jury concerning this arrangement. Salzman denied knowing that the territory manager had any role with the front company, stating that he only learned of the connection within a month before his grand jury appearance. Salzman also testified that he had recently contacted an employee of the front company and asked if the territory manager was involved with the company, and only then did he realize that the territory manager was still involved. None of this was true because Salzman knew from the beginning that the territory manager had established the front company. Indeed, the only reason that Salzman and others hired the front company was to continue to pay the territory manager.

In addition to the Salzman 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;
  • On January 22, 2013, Tom Guerrieri, the former vice president of sales for Orthofix, was sentenced to eight months in prison and ordered to pay $50,000 in fines and forfeiture for paying kickbacks;
  • In July 2012, Michael Cobb, a physician’s assistant, was sentenced to six months in prison and six months home detention, and ordered to forfeit $10,000 and pay a $3,000 fine for accepting kickbacks from Orthofix;
  • On January 9, 2013, Derrick Field, a former Orthofix territory manager, was sentenced to five months of home detention as part of a two year probation sentence, forfeiture of $40,000 and a $4,000 fine;
  • On January 23, 2013, Michael McKay, a former Orthofix territory manager, was sentenced to three months of home detention as part of a one year probation sentence, forfeiture of $10,000 and a $3,000 fine;
  • In September 2012, Brian Racey pleaded guilty to health care while he was a territory manager for Orthofix and is scheduled to be sentenced on Feb. 20, 2013 in the U.S. District Court for the Eastern District of Pennsylvania.
  • On January 24, 2013, the United States filed a plea agreement and criminal Information related to Ilene Terrell, MD, charging her with making a false declaration to a grand jury. A plea hearing is scheduled for Feb. 21, 2013.

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

Updated December 15, 2014