Whistleblowers target Orthofix

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Two whistleblower cases against the Boston-headquartered medical device firm Orthofix are moving forward in U.S. District Court for Massachusetts.

Both actions are so called Qi Tam cases, where individuals can file suit on behalf of the government by alleging wrongdoing at a company that harms the government.

One case was brought by a co-owner of a 25 person medical billing firm. According to documents unsealed by a federal judge April 15, the suit alleges that Orthofix (Nasdaq: OFIX), along with several other medical device firms producing bone-growth stimulation devices, misled doctors into prescribing the devices for longer than needed, thereby defrauding government programs including Medicare.

The suit alleges that the devices are generally only indicated for three to six months and that after that the devices sit around unused. One document states, “These devices can often be found selling on Ebay for $50.”

The suit argues that the devices should therefore be rented to patients, rather than sold for retail prices of more than $3,000. The suit says that the defendant companies have received $175 million from Medicare for the devices since 1998, and that claims for the devices have gone up 250 percent during that time.

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