Federal Judge Rejects Orthofix/DOJ Deal in Boston

A federal judge in Boston has rejected a previously signed plea agreement between the Department of Justice and Orthofix Inc., to resolve a bone growth stimulation criminal investigation.

“It seems in this case the court’s hands ought not be tied, ” U.S. District Judge William Young told prosecutors and lawyers for Orthofix at a September 6 hearing, according to a Bloomberg report. “I have extreme unease of treating corporate criminal conduct like a civil case.”

The Bloomberg report said:

“It is unclear whether Young’s refusal to accept the plea also scuttles Orthofix’s agreement to pay $34.2 million to resolve civil claims first raised in a whistle-blower’s lawsuit that the company defrauded the federal Medicare program through payments to doctors who used its bone-growth stimulators.

“It’s an unusual situation, ” David Schumacher, an assistant U.S. attorney handling the Orthofix case, said in an interview after Young rejected the plea.

Neil Getnick, a New York-based lawyer representing the whistle-blower, said in a telephone interview with Bloomberg that he couldn’t immediately comment on whether Young’s rejection of the plea would affect the settlement of the whistleblower claims.”

Orthofix Remains Confident

Robert Vaters, Orthofix International N.V.’s president and CEO, said the company and the government stand behind their agreements and continue to discuss a resolution to the matter following the court’s rejection of the plea.  In a September 6 press release, Vaters said:

We remain confident that this matter will be resolved amicably and in a manner that is in the best interests of our shareholders.

In a September 7 press release, the company also noted, “As matter of law, a federal court must determine whether there is a factual basis for a criminal plea offered by a defendant and, if it accepts the plea, will then impose its sentence. Federal Rule of Criminal Procedure 11(c)(1)(C) allows criminal defendants to agree with the government, before offering a plea, on a recommended sentence, which becomes binding on the court if it accepts the plea. Orthofix Inc., like other corporate defendants, had previously entered into such an agreement as part of the resolution of the government’s investigation.”