Blackstone Medical, Inc. Settles Kickback Allegations Filed Under False Claims Act for $30 Million

Earlier this month, Orthofix International, a manufacturer of spinal surgery products, settled allegations filed against the company’s subsidiary, Blackstone Medical Inc., for $30 million.  According to the complaint, filed in 2006 under the qui tam provisions of the False Claims Act, Blackstone allegedly paid illegal kickbacks to spinal surgeons to induce them into using Blackstone products.

The whistleblower in this case was Ms. Susan Hutcheson, who was a regional sales manager at Blackstone between 2004 and 2006.  In 2008, after its initial investigation, the government elected not to intervene in Ms. Hutcheson’s case.  She and her attorneys opted to continue to pursue Blackstone on their own and Ms. Hutcheson’s case was initially dismissed.  On appeal though, the United States Court of Appeals for the First Circuit reversed the dismissal and Ms. Hutcheson was able to move forward with her claims against Blackstone.  While the Department of Justice did not formally intervene in Ms. Hutcheson’s case, they took an active role in helping litigate the appeal.  Ms. Hutcheson will receive an $8 million share of the settlement with Orthofix, about 26% of the total recoveries.

Without the significant resources available to the Department of Justice, litigating qui tam cases is tough!  Tycko & Zavareei congratulate Ms. Hutcheson and her attorneys on their successful prosecution of and settlement with Blackstone and Orthofox.

For more information on whistleblower cases and the False Claims Act please visit our website at www.fraudfighters.net.

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