The third time’s the charm for Orthofix International N.V.
Federal Judge Finally Accepts Orthofix/Government Deal
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After a federal judge in Boston rejected two previous agreements between the government and Orthofix to resolve an investigation regarding the company’s bone growth stimulator business, the judge finally blessed the agreement over the December 16 weekend.
The company will pay approximately $43 million to resolve all civil and criminal matters and be subject to a five-year probation period, during which time the company must continue to comply with the terms of its previously executed Corporate Integrity Agreement.
The agreement is consistent with an agreement in principle the company announced in May 2011. The final settlement also includes more than $34 million to resolve a related whistleblower lawsuit filed against the company and, according to a company statement, remains pending against several of Orthofix’s competitors. That suit alleged the company improperly waived patient co-payments, resulting in overpayments by federal programs.
Transformative Period
Bob Vaters, Orthofix’s president and CEO, said the company has made significant investments in compliance and made many organizational changes to enhance the ethical culture of the company. “Through this transformation we have established an ethical tone at the company where integrity and commitment to compliance are paramount.”
The resolution represents the company’s third major government investigation settlement this year, following the final resolution of the investigation concerning the company’s Blackstone Medical Inc. subsidiary and the resolution of the self-reported Foreign Corrupt Practices Act matter announced earlier this year. “I would like to thank our Senior Vice President, General Counsel, Corporate Secretary, Jeffrey Schumm, for his tireless efforts in navigating the company to the conclusion of each of these difficult investigations, ” said Vaters.
The court rejected the previous plea agreement emphasizing certain institutional concerns with binding the court’s sentencing discretion in such a proceeding. The court then invited the government and Orthofix to provide to the court a joint recommendation on sentencing which would not be binding on the court.
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Discussion
This is a fascinating development. In my practice we've seen similar outcomes with the revised protocol. The key differentiator seems to be patient selection criteria. Has anyone else noticed the correlation with BMI thresholds?
Great point. I'd push back slightly on the conclusion, the sample size in the cited study is too small to draw population-level inferences. That said, the directional signal is compelling and worth a larger RCT.
We implemented a similar approach last year. Early results are promising but we're still gathering 12-month follow-up data. Happy to share our protocol if anyone is interested.
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