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Federal judge quashes Orthofix Medicare kickback plea for 2nd time

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Six months after Orthofix International ($OFIX) settled Medicare fraud and kickback charges over the sale of its bone repair products, the company just can't get a judge to sign off on the deal. A U.S. District Court judge in Massachusetts rejected a plea agreement for the second time, Bloomberg reports, after an initial thumbs down in September.

Judge William Young said the agreement would not "ensure the public interest," according to the story, though he noted he had signed off on plea deals in the past. (He said the deal inappropriately restricts his sentencing powers.) Three months ago, Young turned down the deal, he said, due to "extreme unease of treating corporate criminal conduct like a civil case."

Orthofix's deal is pretty simple--agreeing to plead guilty to a felony charge of obstructing an audit. Additionally, the Curaçao-based company said it would pay a $7.5 million fine. Neither side would comment, but the plea rejection may also impair the company's agreement to fork over $34.2 million to resolve a number of civil claims raised in a whistleblower lawsuit.

The whistleblower suit against the company's Blackstone medical subsidiary first brought the case to the federal government's attention. It alleges Orthofix committed Medicare fraud getting doctors to use the company's bone-growth stimulator products through kickbacks.

So far, 5 Orthofix employees have pleaded guilty in connection with the case, the U.S. Justice Department said, as noted by Bloomberg

Recently, Orthofix settled a separate kickback case, where an ex-regional manager sued the company, alleging it paid doctors to use Blackstone products, and in one case arranged for prostitutes and strippers to help seal the deal. That settlement cost Orthofix/Blackstone $32 million, and CEO Robert Waters pledged that the company has made major improvements to its compliance practices.

- read the Bloomberg story

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