Blackstone Medical, Inc., a subsidiary of Curacao-based Orthofix International NV, has agreed to pay $30 million to settle allegations that it violated the False Claims Act. Blackstone, acquired by Orthofix in 2006, specializes in the design, development and marketing of spinal implant products.
Former Blackstone employee Susan Hutcheson filed a whistleblower complaint under the qui tam provisions of the False Claims Act alleging that Blackstone made illegal payments to spinal surgeons to induce them to use Blackstone’s products. According to the whistleblower, the alleged kickbacks included payments for sham consulting agreements, false royalty agreements, exorbitant and sometimes illicit entertainment expenses, and high-end travel and accommodations. The government alleged that the payments violated the False Claims Act because many of the surgeons used the Blackstone products in procedures billed to government health care programs Medicare, Medicaid and TRICARE.
The qui tam action was initially filed in 2006 in Massachusetts. Hutcheson will receive approximately $8 million of the settlement amount as her reward under the False Claims Act.