Medical Device Industry Shows Its Seedy Side Again

In short

In a case which again draws attention to the way in which human nature’s ugly side even affects the supply of healthcare products, the former vice-president of medical device company Orthofix has been convicted in federal court with violating the Anti-Kickback law, having pleaded guilty in a federal court. The case revolves around two schemes involving backhanders, designed to induce purchases of medical devices.

Background

According to a release from the US Attorney’s Office, Thomas P. Guerrieri, 51, of Youngstown, Ohio, has pleaded guilty in federal court before U.S. District Judge Rya W. Zobel for violating the Anti-Kickback statute.

In one case, Guerrieri, the former vice-president of sales at Orthofix, stood accused of facilitating the signing up of a New York surgeon to a “consulting” agreement with the company to induce the surgeon to prescribe the company’s bone growth stimulators. The surgeon was paid tens of thousands of dollars by the company, but provided little or no consulting services in return. The surgeon was supposed to document his services in time sheets provided to the company, but for years he did not fill out these forms or provide any legitimate consulting services, even though he was paid every month.

Allegedly when the surgeon became concerned about increased government scrutiny of consulting arrangements such as his, he together with Guerrieri, and a territory manager for the company decided to create and backdate time sheets going back to 2006 to make it appear as though the surgeon had filled out these forms contemporaneously and performed legitimate consulting services. In addition, at the surgeon’s request, Guerrieri and the territory manager obtained a letter from the company’s general counsel indicating that the surgeon was compliant under his consulting agreement, which was not true. Guerrieri did these things to induce the surgeon to continue to order bone growth stimulators from the company.

In a separate case Guerrieri and others apparently executed a scheme to pay Michael Cobb, a Rhode Island physician’s assistant, for each bone growth stimulator he ordered. The surgeon had delegated to Cobb the choice of which stimulator his patients received. For years, the device company paid Cobb $50-$100 for each stimulator that his surgeon prescribed.

Then in September 2008, the company issued a policy expressly prohibiting any payments to anyone who works for a surgeon that prescribes the company’s products. Guerrieri and others, concerned that if they could no longer pay Cobb under the new policy, the company might lose Cobb’s business, devised a scheme where Cobb continued to be paid for each order, but the payments were made by a vendor of the device company, making it more difficult to trace the paper trail back to the device company. Cobb is also charged with violating the Anti-Kickback law. His plea hearing is set for April 19, 2012 at 3:15 p.m. before Judge George A. O’Toole, Jr.

It’s a sorry tale that doesn’t end well for Guerrieri who, when sentenced later could face up to five years in prison, to be followed by three years of supervised release, a $250,000 fine and forfeiture.

We say

We’ve heard of cases like this a bit too often haven’t we? Which begs the question “why?” Is it a cultural norm in USA like it’s alleged to be in a few other parts of the world? Indeed, does it start with the clinician always expecting “something back” so approaching the sales call with an open hand, or is the poor devil being forced into accepting the loot? Thank goodness that if it has become a cultural norm the disclosure regulations have a chance of reversing it.

Source: US Attorney’s Office