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Orthofix to pay about $43M to settle fraud claims

LEWISVILLE, Texas (AP) -- Orthofix International NV said late Sunday that it has settled all of the criminal and civil cases related to fraudulent claims it made to Medicare and other federal health care programs when selling bone growth stimulator devices.

Under an agreement originally announced in May 2011, the medical implants and surgery products company will pay about $43 million to settle the cases. Those charges were previously recorded in the first quarter of 2011, the company said.

The settlements include a more than $34 million payment to settle a whistleblower civil lawsuit that alleged the company improperly waived patient co-payments, resulting in overpayments by federal programs. The suit also said the company paid kickbacks to physicians and their staffs.

Lewisville, Texas-based Orthofix also pleaded guilty in a related criminal case to a felony charge of obstruction of a federal audit and will pay a nearly $7.8 million criminal fine.

In addition, the court overseeing the case imposed a five-year term of probation, during which the company must continue to comply with the terms of its corporate integrity agreement with the Office of Inspector General of the Department of Health and Human Services, Orthofix said.

Last month, Orthofix agreed to pay $30 million to the federal government to settle whistleblower allegations that a subsidiary paid illegal kickbacks to spinal physicians to use its products.

The whistleblowers in that case claimed that an Orthofix subsidiary provided surgeons with travel, entertainment and benefits including sham consulting, royalty and research deals.

Orthofix shares fell 11 cents to $36.72 in afternoon trading.