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Justice News

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

FOR IMMEDIATE RELEASE
Friday, August 9, 2013

Orthofix Territory Manager Sentenced To Eight Months In Prison For Committing Medicare Fraud And Paying Kickbacks

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BOSTON – A Tennessee man was sentenced today in federal court to eight months in prison and ordered to pay $75,000 in criminal fines and forfeiture for committing Medicare fraud and paying kickbacks to health care professionals.

            On May 7, 2013, Hunter A. Rigsby, 33, of Knoxville, Tenn., pleaded guilty to health care fraud and paying kickbacks.  U.S. District Court Judge F. Dennis Saylor IV sentenced him to eight months in prison to be followed by one year of supervised release.  Judge Saylor also ordered Rigsby to forfeit $70,000, pay a fine of $5,000, and pay restitution to victims of his offenses.

            Rigsby, a former Territory Manager of Orthofix, Inc., admitted that he committed health care fraud, and paid kickbacks to two separate health care professionals.  Between 2005 and 2011, Rigsby sold bone growth stimulator medical devices for Orthofix.  Bone growth stimulators are used to assist spinal fusions and to help heal bone fractures that did not heal properly.  On dozens of occasions, Rigsby altered patient medical records and forged physicians’ signatures on prescriptions and Medicare Certificates of Medical Necessity to induce the Medicare program to pay for bone growth stimulators that were not covered under program guidelines.  Medicare only pays for “long bone” stimulators under certain circumstances; for instance, when at least 90 days have elapsed without clinically significant bone healing.  Rigsby was well-aware of these guidelines, having received training on these guidelines at Orthofix. On numerous occasions, doctors in Rigsby’s territory ordered bone growth stimulators that did not satisfy Medicare’s guidelines.  When this occurred, Rigsby falsified patient records to make it appear as though the claim was payable under Medicare’s guidelines, when in fact Medicare should not have paid.  On some occasions, Rigsby prepared completely falsified orderswhere the physician had not ordered a bone growth stimulator at all.

            In July 2009, Orthofix fired Rigsby after discovering his fraud scheme.  Immediately thereafter, Rigsby and Orthofix sales personnel devised a scheme to allow Rigsby to continue to submit bone growth stimulator orders to Orthofix through a new front company that Rigsby created.  Rigsby concealed his affiliation with the front company so that Orthofix compliance personnel would not detect that he was still doing business with the company.  Rigsby continued to submit orders for stimulators, sending the orders in through separate individuals.  Even though Rigsby had been fired for falsifying medical records, he continued to manipulate patient medical records and forge physician’s signatures until Orthofix finally severed its relationship with him in 2011.  Through his scheme, Rigsby caused Medicare and other federal insurance programs to pay more than $400,000 for bone growth stimulators that should not have been paid because Rigsby falsified claims that were outside of program guidelines.

            Rigsby also paid kickbacks to health care professionals to induce them to order Orthofix stimulators.  For instance, Rigsby paid the person who was responsible for ordering stimulators at one of the largest medical practices in Tennessee.  Rigsby approached this person and asked if he could pay this person in return for steering stimulator orders to Orthofix and Rigsby.  The person agreed, and Rigsby left an envelope with $200 in cash at the person’s house.  As another example, Rigsby entered into an arrangement to pay a nurse in Morristown, Tenn., each time that the surgeon who employed the nurse ordered an Orthofix stimulator.  Rigsby left an envelope of cash ($200-$300) in the back of the nurse’s truck after the surgeon began to order stimulators.

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

  • On Dec. 14, 2012, Orthofix was convicted of obstruction of a federal audit and paid approximately $42 million in criminal fines and civil payments, and was sentenced to probation for five years;
  • On Jan. 22, 2013, Thomas Guerrieri, the former Orthofix Vice President of Sales, was sentenced to eight months in prison and was ordered to pay $50,000 in forfeiture and fines for paying kickbacks to health care professionals; 
  • On July 19, 2012, Michael Cobb, a physician’s assistant, was sentenced to six months in prison and six months home confinement and ordered to forfeit $10,000 and pay a $3,000 fine for accepting kickbacks from Orthofix;
  • On Jan. 31, 2013, Mitchell Salzman, a former Orthofix Regional Manager, was sentenced to three months of home confinement and one year of probation for committing perjury;
  • On Jan. 9, 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 addition to paying $44,000 in forfeiture and fines, for committing health care fraud;
  • On Jan. 23, 2013, Michael McKay, a former Orthofix Territory Manager, was sentenced to three months home confinement and one year probation and paid $13,000 in forfeiture and fines for committing health care fraud;
  • On Sept. 28, 2012, Brian Racey, a former Orthofix Territory Manager, was sentenced to one day incarceration, six month of home confinement, two years of supervised release, and a $2,500 fine for committing health care fraud; and
  • On June 12, 2013, Ilene Terrell, MD, a physician in Virginia, was indicted for making false declarations to a grand jury in Boston. Her trial has not yet been scheduled. 

            The case was investigated by the Department of Health and Human Services Office of Inspector General.  It was prosecuted by Assistant U.S. Attorney David Schumacher of U.S. Attorney Carmen M. Ortiz’s Health Care Fraud Unit.

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Updated December 15, 2014