Ex-Orthofix Manager Sentenced for Defrauding Medicare

A former manager of medical device company Orthofix was sentenced in Jan. 10 in federal court for defrauding Medicare by falsifying patient medical records. U.S. Attorney Ortiz and Susan J. Waddell, special agent in charge of the U.S. Department of Health and Human Services, Office of Inspector General, Office of Investigations, made the announcement.

In March 2012, Derrick R.D. Field, 36, of Greenland, N.H., pleaded guilty to charges of healthcare fraud. U.S. District Court Joseph L. Tauro sentenced him to five months home confinement as part of his two years probation. Judge Tauro also ordered Field to pay a fine of $4,000 and to forfeit $40,000.

Field admitted that for several years he falsified patient medical records, causing Medicare to pay more than $250,000 for fraudulent claims for medical devices. Between 2005 and 2011, Field was a territory manager for Lewisville, Texas-based Orthofix Inc., a company that manufactured and distributes bone growth stimulator medical devices, among other orthopedic implants and devices. Bone growth stimulators are used to assist patients with bone fractures that did not heal properly. Medicare has specific rules describing when it will pay for this device. When Field received bone growth stimulator orders for Medicare patients that did not meet these rules, Field forged the patients’ medical records to make it appear as though the order met the rules to induce Medicare to pay for claims that otherwise would not be covered. For instance, Field created phony medical chart notes, describing patient visits that did not occur and altered the physicians’ actual chart notes by inserting false diagnoses and descriptions of the patients’ medical history. Field forged medical records in connection with more than 100 Medicare claims, causing Medicare to pay Orthofix for orders that did not meet program guidelines.

In addition to Field’s sentence, the ongoing Orthofix investigation has resulted in a number of felony charges against executives, employees and contractors of Orthofix, including the following:

• In December 2011, Mitchell Salzman pleaded guilty to perjury while he was a regional manager for Orthofix;
• In April 2012, Thomas Guerrieri pleaded guilty to paying kickbacks while he was vice president of Orthofix;
• In May 2012, Michael McKay pleaded guilty to healthcare fraud while he was a territory manager for Orthofix;
• In July 2012, Michael Cobb, a physician’s assistant, was sentenced to six months in prison to be followed by two years of supervised release, six months of which under home confinement and ordered to pay $10,000 in forfeiture. Cobb previously pleaded guilty to accepting kickbacks from Orthofix;
• In September 2012, Brian Racey pleaded guilty to healthcare fraud while he was a territory manager for Orthofix; and
• In December 2012, Orthofix was convicted of obstruction of a federal audit, and ordered to pay approximately $42 million in criminal fines and civil payments, and was sentenced to probation for five years.

“Healthcare fraud not only drains valuable taxpayer resources, it drives up overall health care costs and victimizes some of our nation’s most vulnerable members of society, including the elderly and disabled,” said U.S. Attorney Carmen M. Ortiz. “In the District of Massachusetts, we have worked tirelessly to combat healthcare fraud and will continue to hold corporations and individuals accountable.”

The case was prosecuted by Assistant U.S. Attorneys David Schumacher and Jeremy Sternberg of Ortiz’s Health Care Fraud Unit.