Orthofix International will pay $30 million to settle allegations stemming from a whistleblower lawsuit that accused a subsidiary of running a kickback scheme, according to the U.S. Attorney for Massachusetts.
Orthofix lists its official address as Lewisville, Texas, but the firm's holding company, Orthofix Holdings Inc., is based in Boston. The subsidiary, Blackstone Medical, was based in Springfield, Mass. before its acquisition by Orthofix.
Blackstone, a maker of spinal implants and spinal surgery products, allegedly provided kickbacks to health care providers in order to induce those providers to utilize Blackstone products during spinal surgeries. The kickbacks allegedly took many forms, including sham “consulting” agreements, stock options, gifts, travel, unrestricted grants, and entertainment. Federal prosecutors allege that this resulted in the submission of false claims for payment to government health care programs and violated the federal False Claims Act, since the claims were allegedly tainted by kickbacks. The allegations cover Oct. 1, 2000 to Sept. 30, 2007, including both Blackstone’s existence as an independent company, and its acquisition by Orthofix in 2006.