TEXAS-BASED MEDICAL DEVICE MANUFACTURER TO PAY U.S. $1,575,000
TO RESOLVE FALSE CLAIMS ALLEGATIONS

WASHINGTON, D.C. - Medical device manufacturer, Orthofix Inc., has agreed to pay the United States $1,575,000 to settle allegations that the company submitted false claims to TRICARE, the military’s health care program, the Justice Department announced today. The government alleged that Orthofix knowingly submitted claims to TRICARE for payment for Physio-Stim devices sold for unapproved use on the cervical spine.

In the civil settlement agreement, the United States alleged that, pursuant to TRICARE's coverage prohibition and its Policy Manual, TRICARE does not pay for the unapproved use of medical devices. The Physio-Stim has not been approved by the Food and Drug Administration (FDA) for use on the cervical spine.

"This settlement demonstrates our continuing commitment to pursue vigorously allegations of fraud and abuse in federal health care programs," said Peter D. Keisler, Assistant Attorney General for the Department's Civil Division. "Manufacturers of medical equipment, along with other health care providers, can and will be held accountable for their billing practices."

Orthofix, which is headquartered in McKinney, Texas, sells electrical bone growth stimulation products under the trademark names of Physio-Stim and Spinal-Stim. The Physio-Stim products fit on certain parts of the body and are approved by the FDA for the healing of fractures of the long bones, such as an arm or leg. The Spinal-Stim is a device for the mid-section of a person's body and is approved by the FDA for use in healing fusions of the lumbar area of the spine. The FDA has not approved any electrical bone growth stimulation device for use on the cervical part of the spine.

The civil settlement arises from a qui tam or whistleblower suit brought by Karen Neel, a former Orthofix employee, under the federal False Claims Act. TRICARE, formerly known as the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), is administered by the Department of Defense through the TRICARE Management Activity (TMA). The Department of Justice was assisted by the TRICARE Office of Program Integrity in conducting this investigation.

The case is entitled U.S. ex rel. Karen Neel v. Orthofix, Inc. and Orthofix International, N.V., Civil Action No. 3-00CV1333-D (N.D. Texas).

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