A former regional manager at a medical device company will receive an $8 million reward for blowing the whistle on the company’s payment of kickbacks to doctors.

The reward will be paid out of a $30 million settlement by Orthofix International NV to settle allegations that its subsidiary, Blackstone Medical Inc., paid illegal kickbacks to physicians in order to induce them to use the company’s spinal surgery products.

Susan Hutcheson brought the lawsuit against Blackstone Medical, Inc. under the False Claims Act.  That law allows private citizens to start a lawsuit on behalf of the government to recover for false claims submitted to the government.  The whistleblower – known as a “qui tam relator” – is entitled to a percentage of any money the government recovers as a result of the lawsuit.

Ms. Hutcheson’s lawsuit alleged that Blackstone paid kickbacks to doctors so they would use its products in spinal surgeries.  The kickbacks allegedly included monthly payments to the doctors that were disguised as consulting agreements, research grants, royalties, entertainment expenses, travel and accommodations, and speaking engagements.

The kickbacks violated the Anti-Kickback Statute.  As a result, the surgeries were not eligible for reimbursement from Medicare or Medicaid.  When the doctors and hospitals submitted claims to the government healthcare programs, those claims were considered false under the False Claims Act.

Blackstone argued that it should not be liable for submitting false claims to Medicare and Medicaid because no claims were submitted by Blackstone itself.  Any claims were submitted by the doctors who received the kickbacks or the hospitals where the surgeries were performed.

That argument was rejected by the U.S. Court of Appeals for the First Circuit in Boston.  The court ruled that Blackstone could be held liable for violations of the False Claims Act if it “caused another entity to present a materially false or fraudulent claim for payment to the government.”

Once the court rejected its legal arguments, Blackstone and its parent corporation agreed to settle the case.

If you have information that a company is paying kickbacks to health care professionals, then you should consult with an experienced healthcare whistleblower attorney immediately.  To schedule a free and confidential consultation by telephone or in person, call my office today at (917) 652-6504 or click here to communicate with me via email.

John Howley
New York, New York

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