Orthofix Board of Directors questions recent nominee

The chairman of the Board of Directors of Orthofix International has raised concerns about the recent nomination to the Orthofix Board of Steven J. Lee of Ramius LLC. Orthofix Board Chairman, James F. Gero, protested the nomination in a letter to Jeffrey Smith with Ramius Capital. Mr. Gero noted that Mr. Lee had founded and served as President and Chairman of the Board of PolyMedica Corporation, a medical products company based in Massachusetts. During the time of Mr. Lee’s leadership, PolyMedica’s subsidiaries in Florida, Liberty Home Pharmacy and Liberty Medical Supply, were investigated by the federal government. Subsequently, two whistleblower lawsuits were filed in 2001 in federal court in Boston and Miami against PolyMedica and the Florida subsidiaries. The lawsuits charged that the companies had violated the False Claims Act by making claims for payment to Medicare without providing required documentation of medical necessity, which led to the overbilling of federal health care programs. Mr. Lee left PolyMedica in 2002 after the U.S. Department of Justice launched a Medicare fraud investigation against the company. In 2004, PolyMedica was forced to pay the federal government a $35 million settlement to resolve the False Claims Act litigation. The settlement came after a five-year investigation in which the FBI conducted on site searches of the Florida subsidiaries. Gero raised concerns that Mr. Lee’s presence on the Orthofix Board could detract from Orthofix’s recent implementation of corporate ethics and integrity programs.

Orthofix International is an international medical device company that manufactures minimally invasive products for use in the medical treatment of spine and orthopedic conditions.

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