CORPORATE INTEGRITY AGREEMENT BETWEEN THE OFFICE OF INSPECTOR GENERAL OF THE DEPARTMENT OF HEALTH AND HUMAN SERVICES AND ORTHOFIX INTERNATIONAL, N.V.

revised Code of Conduct shall be distributed within 30 days after any revisions are finalized. Each Covered Person shall certify, in writing, that he or she has received, read, understood, and shall abide by the revised Code of Conduct within 30 days after the distribution of the revised Code of Conduct.

2.                                       Policies and Procedures. Prior to the Effective Date, Orthofix has implemented written Policies and Procedures regarding the operation of Orthofix’s compliance program and Orthofix’s obligation to comply with Federal health care program requirements. To the extent not already accomplished, within 120 days after the Effective Date, Orthofix shall implement written Policies and Procedures regarding the compliance program requirements outlined in this CIA and Orthofix’s compliance with Federal health care program and FDA requirements. The Policies and Procedures shall also address:

a.                                       the Federal health care program requirements regarding the accurate submission of claims;

b.                                      42 U.S.C. § 1320a-7b(b) (Anti-Kickback Statute) and 42 U.S.C. § 1395nn (Stark Law), and the regulations and other guidance documents related to these statutes, and business or financial arrangements or contracts that generate unlawful Federal health care program business in violation of the Anti-Kickback Statute or the Stark Law;

c.                                       the requirements set forth in Section III.D.2 and 3 (compliance with the Anti-Kickback Statute and Stark Law).

d.                                      appropriate ways to conduct Promotional and Product Services Related Functions in compliance with all applicable FDA and Federal health care program requirements;

e.                                       the materials and information that may be distributed by Orthofix sales representatives about Orthofix products and the manner in which Orthofix sales representatives respond to requests for information about Orthofix’s products;

f.                                         the materials and information that may be distributed by Orthofix’s clinical affairs or regulatory affairs departments in

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response to requests for clinical information about Orthofix products and the mechanisms through, and manner in which, such clinical or regulatory affairs personnel receive and respond to requests for information about uses of the products; the form and content of the information disseminated by Orthofix in response to such requests; and the internal review process for the information disseminated;

g.                                      review of all promotional and other materials and information intended to be disseminated outside Orthofix by appropriate qualified personnel (such as legal, clinical, and/or regulatory personnel) in a manner designed to ensure that legal, regulatory, and/or clinical concerns are properly addressed during Orthofix’s review and approval process and are elevated when appropriate. The Policies and Procedures shall be designed to ensure that such materials and information, when finally approved, comply with all applicable Federal health care program and FDA requirements. The Policies and Procedures shall require review by appropriately qualified personnel of all promotional materials prior to the distribution or use of such materials;

h.                                      programs to educate sales representatives. These Policies and Procedures shall be designed to ensure that the programs are used in accordance with applicable Federal health care program and FDA requirements;

i.                                          consultant or other fee-for-service arrangements entered into with any health care professional (HCP) or health care institution (HCI) (including, but not limited to, speaker programs, speaker training programs, advisory boards, or any other financial relationship with an HCP or HCI) and all events and expenses relating to such engagements or arrangements. These Policies and Procedures shall be designed to ensure that the arrangements and related events are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements. The Policies shall include requirements about

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the content and circumstances of such arrangements and events;

j.                                          sponsorship or funding of grants (including educational grants) or charitable contributions. These Policies and Procedures shall be designed to ensure that Orthofix’s funding and/or sponsorship complies with all applicable Federal health care program and FDA requirements;

k.                                       funding of, or participation in, any Third Party Educational Activity as defined in Section II.C.11 above. These Policies and Procedures shall be designed to ensure that Orthofix’s funding and/or sponsorship of such programs satisfies all applicable Federal health care program and FDA requirements.

The Policies and Procedures shall require that, with respect to Third Party Educational Activities that Orthofix agrees to fund after the Effective Date: (1) Orthofix disclose its financial support of the Third Party Educational Activity and any financial relationships with faculty, speakers, or organizers at such activity; (2) as a condition of funding, the third party shall agree to disclose Orthofix’s financial support of the Third Party Educational Activity and any financial relationships that Orthofix might have with faculty, speakers, or organizers at such activity; (3) any faculty, speakers, or organizers at the Third Party Educational Activity disclose any financial relationship with Orthofix; (4) the Third Party Educational Activity have an educational focus; (5) the content, organization, and operation of the Third Party Educational Activity be independent of Orthofix control; (6) Orthofix support only Third Party Educational Activities that are non-promotional in tone/nature; and (7) Orthofix’s support of a Third Party Educational Activity shall be contingent on the provider’s commitment to provide information at the Educational Activity that is fair, balanced, accurate and not misleading;

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l.                                          sponsorship, funding of, and disclosures relating to research and development-related activities (including clinical trials, market research, or authorship of articles or other publications). These Policies and Procedures shall be designed to ensure that Orthofix’s funding and/or sponsorship complies with all applicable Federal health care program and FDA requirements;

m.                                    authorship of any articles or other publications about Government Reimbursed Products or about therapeutic areas or disease states that may be treated with Government Reimbursed Products, including, but not limited to, the disclosure of any and all relationships between the author and Orthofix, the identification of all authors or contributors (including professional writers) associated with a given publication, and the scope and breadth of research results made available to each author or contributor;

n.                                      compensation (including salaries and bonuses) for Promotional and Product Services Covered Persons. These Policies and Procedures shall be designed to ensure that financial incentives do not inappropriately motivate such individuals to engage in improper promotion, sales, and marketing of Orthofix’s products;

o.                                      the subjects relating to the Code of Conduct identified in Section III.B.1; and

p.                                      disciplinary policies and procedures for violations of Orthofix’s Policies and Procedures, including policies relating to Federal health care program and FDA requirements.

To the extent not already accomplished, within 120 days after the Effective Date, the relevant portions of the Policies and Procedures shall be distributed to all Covered Persons whose job functions relate to those Policies and Procedures. Appropriate and knowledgeable staff shall be available to explain the Policies and Procedures.

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At least annually (and more frequently, if appropriate), Orthofix shall assess and update, as necessary, the Policies and Procedures. Within 30 days after the effective date of any revisions, the relevant portions of any such revised Policies and Procedures shall be distributed to all Covered Persons whose job functions relate to those Policies and Procedures.

C.            Training and Education

1.             General Training. Within 120 days after the Effective Date, Orthofix shall provide at least two hours of General Training to each Covered Person. This training, at a minimum, shall explain:

a.                                       Orthofix’s CIA requirements;

b.                                      Orthofix’s Compliance Program, including the Code of Conduct and the Policies and Procedures as they pertain to general compliance issues; and

c.                                       the possible consequences to both Orthofix and Covered Persons of failure to comply with all FDA and Federal health care program requirements and with Orthofix’s own Code of Conduct and Policies and Procedures and the failure to report such noncompliance.

New Covered Persons shall receive the General Training described above within 30 days after becoming a Covered Person or within 120 days after the Effective Date, whichever is later. After receiving the initial General Training described above, each Covered Person shall receive at least one hour of General Training in each subsequent Reporting Period.

2.             Specific Training. Within 120 days after the Effective Date, each Arrangements Covered Person and Government Reimbursement Covered Person shall receive at least three hours of Specific Training, as identified below, in addition to the General Training required above, as follows:

a.                                       Arrangements Training for Arrangements Covered Persons shall include a discussion of:

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i.                                          Arrangements that potentially implicate the Anti- Kickback Statute or the Stark Law, as well as the regulations and other guidance documents related to these statutes;

ii.                                      Orthofix’s policies, procedures, and other requirements relating to Arrangements and Focus Arrangements, including but not limited to the Focus Arrangements Tracking System, the internal review and approval process, and the tracking of remuneration to and from sources of health care business or referrals required by Sections III.D.2 and III.D.3 of the CIA;

iii.                                    examples of violations of the Anti-Kickback Statute and the Stark Law;

iv.                                   the personal obligation of each individual involved in the development, approval, management, or review of Orthofix’s Arrangements to know the applicable legal requirements and Orthofix’s Policies and Procedures;

v.                                      the legal sanctions under the Anti-Kickback Statute and the Stark Law; and

vi.                                   the possible consequences to both Orthofix and Arrangements Covered Persons of failure to comply with all Federal health care program requirements and with Orthofix’s own Code of Conduct and Policies and Procedures and the failure to report such noncompliance.

b.                                      Government Reimbursement Training for Government Reimbursement Covered Persons shall include a discussion of:

i.                                          the Federal health care program requirements regarding the accurate submission of claims;

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ii.                                       examples of proper and improper claims submission practices;

iii.                                    policies, procedures, and other requirements applicable to the documentation of medical records;

iv.                                   applicable reimbursement statutes, regulations, and program requirements and directives;

v.                                      the personal obligation of each individual involved in the claims submission process to ensure that such claims are accurate;

vi.                                   the legal sanctions for violations of the Federal health care program requirements; and

vii.                                the possible consequences to both Orthofix and Government Reimbursement Covered Persons of failure to comply with all Federal health care program requirements and with Orthofix’s own Code of Conduct and Policies and Procedures and the failure to report such noncompliance.

Each new Arrangements Covered Person and Government Reimbursement Covered Person shall receive the appropriate training, as identified above, within 30 days after the beginning of their employment or becoming an Arrangements Covered Person or Government Reimbursement Covered Person or within 120 days after the Effective Date, whichever is later.

An Orthofix employee who has completed the Specific Training shall review a new Arrangements Covered Person’s or Government Reimbursement Covered Person’s work, to the extent that the work relates to an Arrangements Function or a Government Reimbursement Related Function, until such time as the Arrangements Covered Person or Government Reimbursement Covered Person completes his or her Specific Training.

After receiving the initial Specific Training described in this Section, each Arrangements Covered Person or Government Reimbursement Covered Person shall

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receive at least two hours of Specific Training, in addition to the General Training, in each subsequent Reporting Period.

3.             Board Member Training. Within 120 days after the Effective Date, Orthofix shall provide at least two hours of training to each member of the Orthofix Board of Directors, in addition to the General Training. This training shall address the responsibilities of board members and corporate governance.

New members of the Orthofix Board of Directors shall receive the Board Member Training described above within 30 days after becoming a member or within 120 days after the Effective Date, whichever is later.

4.             Certification. Each individual who is required to attend training shall certify, in writing, or in electronic form, if applicable, that he or she has received the required training. The certification shall specify the type of training received and the date received. The Chief Compliance Officer (or designee) shall retain the certifications, along with all course materials.

5.             Qualifications of Trainer. Persons providing the training shall be knowledgeable about the subject area.

6.             Update of Training. Orthofix shall review the training annually, and, where appropriate, update the training to reflect changes in Federal health care program requirements, any issues discovered during internal audits, the Internal Monitoring Program, the Claims Review, or the Arrangements Review, and any other relevant information.

7.             Computer-based Training. Orthofix may provide the training required under this CIA through appropriate computer-based  training approaches. If Orthofix chooses to provide computer-based  training, it shall make available appropriately qualified and knowledgeable staff or trainers to answer questions or provide additional information to the individuals receiving such training.

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D.            Review Procedures

1.             General Description.

a.                                       Engagement of Independent Review Organization. Within 120 days after the Effective Date, Orthofix shall engage an individual (or individuals) or entity (or entities), such as an accounting, auditing, law, or consulting firm (hereinafter “Independent Review Organization” or “IRO”), to perform the reviews listed in Section III.D. The applicable requirements relating to the IRO(s) are outlined below and in Appendix A to this CIA, which is incorporated by reference.

i.                                          Claims Review. An IRO shall perform a review of OFX’s billing and claims submission to the Federal health care programs and the reimbursement received (Claims Review) and shall prepare a Claims Review Report, as outlined in Appendix B to this CIA, which is incorporated by reference.

ii.                                       Arrangements Review. An IRO shall perform an Arrangements Review and prepare an Arrangements Review Report as outlined in Appendix C to this CIA, which is incorporated by reference.

b.                                      Retention of Records. The IRO(s) and Orthofix shall retain and make available to OIG, upon request, all work papers, supporting documentation, correspondence, and draft reports (those exchanged between the IRO and Orthofix) related to the reviews.

c.                                       Responsibilities and Liabilities. Nothing in this Section III.D affects Orthofix’s responsibilities or liabilities under any criminal, civil, or administrative laws or regulations applicable to any Federal health care program including, but not limited to, the Anti-Kickback Statute and/or the Stark Law.

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d.                                      Validation Review(s). In the event OIG has reason to believe that: (a) the Arrangements Review or Claims Review fails to conform to the requirements of this CIA; or (b) the IRO’s findings or Arrangements Review or Claims Review results are inaccurate, OIG may, at its sole discretion, conduct its own review to determine whether the Arrangements Review or Claims Review complied with the requirements of the CIA and/or the findings or Arrangements Review or Claims Review results are inaccurate (Validation Review(s)). Orthofix shall pay for the reasonable cost of any such review performed by OIG or any of its designated agents. Any Validation Review of IRO Reports submitted as part of Orthofix’s final Annual Report shall be initiated no later than one year after Orthofix’s final submission (as described in Section II.B) is received by OIG.

Prior to initiating a Validation Review, OIG shall notify Orthofix of its intent to do so and provide a written explanation of why OIG believes such a review is necessary. To resolve any concerns raised by OIG, Orthofix may request a meeting with OIG to: (a) discuss the results of any Arrangements Review or Claims Review submissions or findings; (b) present any additional information to clarify the results of the Arrangements Review or Claims Review or to correct the inaccuracy of the Arrangements Review or Claims Review; and/or (c) propose alternatives to the proposed Validation Review(s). Orthofix agrees to provide any additional information as may be requested by OIG under this Section III.D.1.d in an expedited manner. OIG will attempt in good faith to resolve any Arrangements Review or Claims Review issues with Orthofix prior to conducting a Validation Review. However, the final determination as to whether or not to proceed with a Validation Review shall be made at the sole discretion of OIG.

e.                                       Independence and Objectivity Certification. The IRO(s) shall include in its (their) report(s) to Orthofix a certification or sworn affidavit that it has evaluated its professional

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independence and objectivity and has concluded that it is, in fact, independent and objective.

2.             Compliance with the Anti-Kickback Statute and Stark Law; Focus Arrangements Procedures.

Within 120 days after the Effective Date, Orthofix shall create procedures reasonably designed to ensure that each existing and new or renewed Focus Arrangement does not violate the Anti-Kickback Statute and/or the Stark Law or the regulations, directives, and guidance related to these statutes (Focus Arrangements Procedures). These procedures shall include the following:

a.                                       creating and maintaining a centralized tracking system for all existing and new or renewed Focus Arrangements (Focus Arrangements Tracking System);

b.                                      tracking remuneration to and from all parties to Focus Arrangements;

c.                                       tracking service and activity logs to ensure that parties to the Focus Arrangement are performing the services required under the applicable Focus Arrangement(s) (if applicable);

d.                                      monitoring the use of leased space, medical supplies, medical devices, equipment, or other patient care items to ensure that such use is consistent with the terms of the applicable Focus Arrangement(s) (if applicable);

e.                                       establishing and implementing a written review and approval process for all Focus Arrangements, the purpose of which is to ensure that all new and existing or renewed Focus Arrangements do not violate the Anti-Kickback Statute and Stark Law, and that includes at least the following: (i) a legal review of all Focus Arrangements by counsel with expertise in the Anti-Kickback Statute and Stark Law, (ii) a process for specifying the business need or business rationale for all Focus Arrangements, and (iii) a process for determining and

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documenting the fair market value of the remuneration specified in the Focus Arrangement;

f.                                         requiring the Chief Compliance Officer to review the Focus Arrangements Tracking System, internal review and approval process, and other Focus Arrangements Procedures on at least an annual basis and to provide a report on the results of such review to the Compliance Committee; and

g.                                      implementing effective responses when suspected violations of the Anti-Kickback Statute and Stark Law are discovered, including disclosing Reportable Events and quantifying and repaying Overpayments pursuant to Sections III.H and III.I when appropriate.

3.                                       New or Renewed Arrangements. Prior to entering into new Focus Arrangements or renewing existing Focus Arrangements, in addition to complying with the Focus Arrangements Procedures set forth above, Orthofix shall comply with the following requirements (Focus Arrangements Requirements):

a.                                       Ensure that each Focus Arrangement is set forth in writing and signed by Orthofix and the other parties to the Focus Arrangement;

b.                                      Include in the written agreement a requirement that each party to a Focus Arrangement who meets the definition of a Covered Person shall complete the Arrangements Training required by Section III.C.2 of this CIA. Additionally, Orthofix shall provide each party to the Focus Arrangement with a copy of its Code of Conduct and, for any Focus Arrangement that is new or renewed at any time after 120 days after the Effective Date, with a copy of its Stark Law and Anti-Kickback Statute Policies and Procedures;

c.                                       Include in the written agreement a certification by the parties to the Focus Arrangement that the parties shall not violate the Anti-Kickback Statute and the Stark Law with respect to the performance of the Arrangement.

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E.                                      Disclosure Program

Prior to the Effective Date, Orthofix established a Disclosure Program. To the extent not already provided for in Orthofix’s Disclosure Program, it shall include a mechanism (e.g., a toll-free compliance telephone line) to enable individuals to disclose, to the Chief Compliance Officer or some other person who is not in the disclosing individual’s chain of command, any identified issues or questions associated with Orthofix’s policies, conduct, practices, or procedures with respect to a Federal health care program or FDA requirement believed by the individual to be a potential violation of criminal, civil, or administrative law. Orthofix shall appropriately publicize the existence of the disclosure mechanism (e.g., via periodic e-mails to employees or by posting the information in prominent common areas).

The Disclosure Program shall emphasize a non-retribution, non-retaliation policy, and shall include a reporting mechanism for anonymous communications for which appropriate confidentiality shall be maintained. Upon receipt of a disclosure, the Chief Compliance Officer (or designee) shall gather all relevant information from the disclosing individual. The Chief Compliance Officer (or designee) shall make a preliminary, good-faith inquiry into the allegations set forth in every disclosure to ensure that he or she has obtained all of the information necessary to determine whether a further review should be conducted. For any disclosure that is sufficiently specific so that it reasonably: (1) permits a determination of the appropriateness of the alleged improper practice; and (2) provides an opportunity for taking corrective action, Orthofix shall conduct an internal review of the allegations set forth in the disclosure and ensure that proper follow-up is conducted.

The Chief Compliance Officer (or designee) shall maintain a disclosure log, which shall include a record and summary of each disclosure received (whether anonymous or not), the status of the respective internal reviews, and any corrective action taken in response to the internal reviews.

F.                                      Ineligible Persons

1.                                       Definitions. For purposes of this CIA:

a.                                       an “Ineligible Person” shall include an individual or entity who:

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i.                                          is currently excluded, debarred, suspended, or otherwise ineligible to participate in the Federal health care programs or in Federal procurement or nonprocurement programs; or

ii.                                       has been convicted of a criminal offense that falls within the scope of 42 U.S.C. § 1320a-7(a), but has not yet been excluded, debarred, suspended, or otherwise declared ineligible.

b.                                      “Exclusion Lists” include:

i.                                          the HHS/OIG List of Excluded Individuals/Entities (available through the Internet at
http://www.oig.hhs.gov); and

ii.                                       the General Services Administration’s List of Parties Excluded from Federal Programs (available through the Internet at http://www.epls.gov).

2.                                       Screening Requirements. Prior to the Effective Date, Orthofix established a process for ensuring that Covered Persons are not Ineligible Persons. To the extent not already accomplished in that process, Orthofix shall ensure that all prospective and current Covered Persons are not Ineligible Persons, by implementing the following screening requirements.

a.                                       Orthofix shall screen all prospective Covered Persons against the Exclusion Lists prior to engaging their services and, as part of the hiring or contracting process, shall require such Covered Persons to disclose whether they are Ineligible Persons.

b.                                      Orthofix shall screen all Covered Persons against the Exclusion Lists within 90 days after the Effective Date and on an annual basis thereafter.

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c.                                       Within 120 days after the Effective Date, Orthofix shall implement a policy requiring all Covered Persons to disclose immediately any debarment, exclusion, suspension, or other event that makes that person an Ineligible Person.

Nothing in Section III.F affects Orthofix’s responsibility to refrain from (and liability for) billing Federal health care programs for items or services furnished, ordered, or prescribed by an excluded person. Orthofix understands that items or services furnished by excluded persons are not payable by Federal health care programs and that Orthofix may be liable for overpayments and/or criminal, civil, and administrative sanctions for employing or contracting with an excluded person regardless of whether Orthofix meets the requirements of Section III.F.

3.                                       Removal Requirement. If Orthofix has actual notice that a Covered Person has become an Ineligible Person, Orthofix shall remove such Covered Person from responsibility for, or involvement with, Orthofix’s business operations related to the Federal health care programs and shall remove such Covered Person from any position for which the Covered Person’s compensation or the items or services furnished, ordered, or prescribed by the Covered Person are paid in whole or part, directly or indirectly, by Federal health care programs or otherwise with Federal funds at least until such time as the Covered Person is reinstated into participation in the Federal health care programs.

4.                                       Pending Charges and Proposed Exclusions. If Orthofix has actual notice that a Covered Person is charged with a criminal offense that falls within the scope of 42 U.S.C. §§ 1320a-7(a), 1320a-7(b)(1)-(3), or is proposed for exclusion during the Covered Person’s employment or contract term, Orthofix shall take all appropriate actions to ensure that the responsibilities of that Covered Person have not and shall not adversely affect the quality of care rendered to any beneficiary, patient, or resident, or any claims submitted to any Federal health care program.

G.                                     Notification of Government Investigation or Legal Proceedings

Within 30 days after discovery, Orthofix shall notify OIG, in writing, of any ongoing investigation or legal proceeding known to Orthofix conducted or brought by a U.S. governmental entity or its agents involving an allegation that Orthofix has committed a crime or has engaged in fraudulent activities. This notification shall include a description of the allegation, the identity of the investigating or prosecuting agency, and the status of such investigation or legal proceeding. Orthofix shall also provide written

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notice to OIG within 30 days after the resolution of the matter, and shall provide OIG with a description of the findings and/or results of the investigation or proceedings, if any.

H.                                    Repayment of Overpayments

1.                                       Definition of Overpayments. For purposes of this CIA, an “Overpayment” shall mean the amount of money Orthofix has received in excess of the amount due and payable under any Federal health care program requirements.

2.                                       Repayment of Overpayments.

a.                                       If, at any time, Orthofix identifies any Overpayment, Orthofix shall repay the Overpayment to the appropriate payor (e.g., Medicare fiscal intermediary or carrier) within 60 days after identification of the Overpayment and take remedial steps within 60 days after identification (or such additional time as may be agreed to by the payor) to correct the problem, including preventing the underlying problem and the Overpayment from recurring. If not yet quantified, within 60 days after identification, Orthofix shall notify the payor of its efforts to quantify the Overpayment amount along with a schedule of when such work is expected to be completed. Notification and repayment to the payor shall be done in accordance with the payor’s policies.

b.                                      Notwithstanding the above, notification and repayment of any Overpayment amount that routinely is reconciled or adjusted pursuant to policies and procedures established by the payor should be handled in accordance with such policies and procedures.

I.                                         Reportable Events

1.                                       Definition of Reportable Event. For purposes of this CIA, a “Reportable Event” means anything that involves:

a.                                       a substantial Overpayment;

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b.                                      a matter that a reasonable person would consider a probable violation of criminal, civil, or administrative laws applicable to any Federal health care program or FDA requirement for which penalties or exclusion may be authorized;

c.                                       the employment of or contracting with a Covered Person who is an Ineligible Person as defined by Section III.F.1.a; or

d.                                      the filing of a bankruptcy petition by Orthofix.

A Reportable Event may be the result of an isolated event or a series of occurrences.

2.                                       Reporting of Reportable Events. If Orthofix determines (after a reasonable opportunity to conduct an appropriate review or investigation of the allegations) through any means that there is a Reportable Event, Orthofix shall notify OIG, in writing, within 30 days after making the determination that the Reportable Event exists.

3.                                       Reportable Events under Section III.I.1.a. For Reportable Events under Section III.I.1.a, the report to the OIG shall be made within 30 days of identification of the overpayment, even if not yet quantified. The report shall include:

a.                                       a description of the steps taken by Orthofix to identify and quantify the Overpayment;

b.                                      a complete description of the Reportable Event, including the relevant facts, persons involved, and legal and Federal health care program implicated;

c.                                       a description of Orthofix’s actions taken to correct the Reportable Event; and

d.                                      any further steps Orthofix plans to take to address the Reportable Event and prevent it from recurring.

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Orthofix shall also submit to OIG a copy of the notification and repayment to the payor required in Section III.H.2 simultaneous with the transmission of such notification and repayment to the payor.

4.                                       Reportable Events under Section III.I.1.b and c. For Reportable Events under Section III.I.1.b and III.I.1.c, the report to OIG shall include:

a.                                       a complete description of the Reportable Event, including the relevant facts, persons involved, and legal and Federal health care program authorities implicated;

b.                                      a description of Orthofix’s actions taken to correct the Reportable Event;

c.                                       any further steps Orthofix plans to take to address the Reportable Event and prevent it from recurring; and

d.                                      if the Reportable Event has resulted in an Overpayment, a description of the steps taken by Orthofix to identify and quantify the Overpayment.

5.                                       Reportable Events under Section III.I.1.d. For Reportable Events under Section III.I.1.d, the report to the OIG shall include documentation of the bankruptcy filing and a description of any Federal health care program authorities implicated.

6.                                       Reportable Events Involving the Stark Law. Notwithstanding the reporting requirements outlined above, any Reportable Event that involves only a probable violation of section 1877 of the Social Security Act, 42 U.S.C. §1395nn (the Stark Law) should be submitted by Orthofix to the Centers for Medicare & Medicaid Services (CMS) through the self-referral disclosure protocol (SRDP), with a copy to the OIG. The requirements of Sections III.H.2 and III.I.2 that require repayment to the payor of any identified Overpayment within 60 days shall not apply to any Overpayment that may result from a probable violation of only the Stark Law that is disclosed to CMS pursuant to the SRDP.

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J.                                        Internal Monitoring Program

1.                                       Observations.

Within 120 days after the Effective Date, OFX and OSI shall establish an Internal Monitoring Program (IMP) to evaluate and monitor various aspects of OFX’s and OSI’s interactions with HCPs and HCIs, including interactions between OFX and OSI Promotional and Product Services Covered Persons; HCPs and HCIs; and HCP and HCI staff members.

a.                                       Compliance Review Program. OFX and OSI managers shall conduct direct field observations (Compliance Reviews) of their directly reporting employees and contracted sales agents, including sales management and OFX and OSI Promotional and Product Services Covered Persons, marketing personnel and management, and sales support personnel to assess whether those employees know, understand, and comply with the Policies and Procedures required by the CIA. Each Compliance Review shall consist of a full day ride-along that includes direct observation of meetings between the reviewed employee and HCPs; other representatives of HCIs; and HCP and HCI staff members.

OFX and OSI shall conduct at least 50 Compliance Reviews annually (25 for OFX and 25 for OSI). The compliance reviews shall be scheduled throughout the year. Orthofix compliance personnel shall select the employees to be observed by utilizing a selection method that is randomized but provides for a distribution of Compliance Reviews across the United States in a manner proportionate to the size of each business division, across business divisions.

Orthofix compliance personnel shall accompany managers on at least 26 (13 from OFX and 13 from OSI) Compliance Reviews annually. Orthofix compliance personnel shall select the Compliance Reviews in which they will directly participate by utilizing a selection method that is randomized but provides for a distribution of Compliance Reviews across the United States in a manner proportionate to the size of each business division, across business divisions.

At the completion of each Compliance Review, the reviewing manager and the accompanying compliance personnel, if any, shall each prepare a report which includes:

1)              the identity of the reviewed employee;

2)              the identity of the manager/reviewer;

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3)              the date and duration of the Compliance Review;

4)              an overall assessment of compliance with and understanding of the Policies and Procedures;

5)              the identification of any potential non-compliance with the Policies or Procedures; and

6)              such other elements as Orthofix’s Compliance Office may require.

b.                                      Reporting and Follow-up. In the event that a compliance issue is identified during any Compliance Review, Orthofix shall investigate the incident consistent with established Policies and Procedures for the handling of investigations. As part of the formal investigation procedures, findings shall be made and all necessary and appropriate responsive action (including disciplinary action) and corrective action shall be taken. The Chief Compliance Officer shall disclose Reportable Events pursuant to Section III.I above, if applicable. The Compliance Office shall maintain records of any compliance issues identified during a Compliance Review and any corrective action.

Orthofix shall include a summary of the IMP and its results as part of each Annual Report. Orthofix shall make the reports for all IMP activities available to the OIG upon request.

2.                                      Consultant Monitoring Activities.

a.                                       Prior to the Effective Date, Orthofix implemented a Needs Assessment program which requires, among other things, a written analysis be performed to justify the retention of or payment to any HCP, the identification of the business need for the consulting services to be provided, and specification of details about the consulting arrangement. To the extent not already implemented, within 120 days after the Effective Date, Orthofix shall establish a Consultant Monitoring Program (CMP) to evaluate and monitor various aspects of Orthofix’s interactions with HCPs, as set forth in more detail below.

b.                                      To the extent that Orthofix engages or compensates a HCP to provide services or participate in training about Government Reimbursed Products (e.g., as a member of an advisory board, as an attendee at a product training session, as a trainer, as a speaker, as a participant in data-gathering exercises, or being involved in tutorials, preceptorships, or research-related functions that relate to Government Reimbursed Products (in each case, including market preference evaluations, but excluding FDA-

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registered clinical investigations)), such an HCP shall be referred to for purposes of this sub-section as a “Consultant.” Orthofix shall require all Consultants to enter written agreements describing the scope of work to be performed, the fees to be paid, expenses to be reimbursed, and compliance obligations for the Consultant. Consultants shall be paid and their expenses reimbursed according to a centrally managed, pre-set rate structure that is determined based on a fair market value analysis conducted by Orthofix.

c.                                       Prior to the retention of a Consultant, Orthofix shall conduct a thorough written analysis (Needs Assessment) to justify the retention of or payment to the Consultant. The Needs Assessment shall include an identification of the business need for engagement or compensation of the Consultant and provide specific details about the consulting arrangement (including, for example, information about the numbers and qualifications of the HCPs to be engaged, the agenda for any proposed advisory board meeting, and a description of the proposed work to be done and type of work product to be generated by the Consultant).

d.                                      Within 180 days after the Effective Date, Orthofix shall establish a process to develop an annual Consultant budgeting plan that identifies the business needs for, and the estimated numbers of, various Consultant engagements and activities to occur during the year. The annual Consultant budgeting plan shall also identify the budgeted amounts to be spent on Consultant-related activities. Personnel from Orthofix’s legal department shall be involved in the review and approval of such plans, including any subsequent modification of an approved plan.

e.                                       To the extent not already accomplished, within 180 days after the Effective Date, Orthofix shall also establish a process to obtain compliance and legal review of all Needs Assessments associated with the retention of any Consultant prior to the retention of the Consultant. The purpose of this compliance and legal review shall be to ensure that Consultant arrangements and related events are used for legitimate and lawful purposes in accordance with applicable Federal health care program and FDA requirements, and that Consultant arrangements are consistent with the applicable approved Consultant budgeting plan. Any deviations from the Consultant budgeting plans shall be documented in the Needs Assessments (or elsewhere, as appropriate) and shall be considered as part of the compliance and legal review. To the extent not already accomplished, within 120 days after the Effective Date, Orthofix shall amend its policies to require the collection, assessment, and retention of work product (if any) generated by Consultants.

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f.                                         Orthofix shall conduct audits (Consultant Program Audits) of the various types of consultant arrangements entered with HCPs. For the first Reporting Period, Orthofix shall identify the 25 Consultants who received the largest amounts of compensation from OFX and OSI during the six months prior to the end of the Reporting Period. Orthofix shall audit all activities provided by the selected Consultants during the six months prior to the end of the Reporting Period. For the second and subsequent Reporting Periods, 90 days prior to the end of the applicable prior Reporting Period Orthofix shall provide information to the OIG about the numbers of each type of consulting arrangement entered by OFX and OSI, the numbers of Consultants retained for each type of arrangement, and the aggregate amounts of funds expended for each type of consulting arrangement during the Reporting Period. The OIG shall then select up to three types of arrangements to be audited and shall identify the number of each type of program to be audited by Orthofix for each applicable Reporting Period. For the second and subsequent Reporting Periods, the Consultant Monitoring Program shall review Consultant arrangements both on a risk-based targeting approach and on a random sampling approach.

g.                                      Personnel conducting the Consultant Program Audits shall review the Needs Assessment, consultant contracts, and materials relating to the arrangement or work of the Consultant (including a verification that the work product resulting from any Consultant-related program or event or otherwise generated by the Consultant is consistent with the stated business need set forth on the business rationale form or elsewhere), in order to assess whether the arrangements were conducted in a manner consistent with Orthofix’s Policies and Procedures. Results from the Consultant Program Audits shall be compiled and reported to Orthofix headquarters for review and remediation as appropriate. Potential violations of Orthofix’s Policies and Procedures shall be reported to the Compliance Office for appropriate follow-up activity.

3. Reporting and Follow-up. Personnel conducting the Compliance Reviews and Consultant Program Audits shall have access to all relevant records and information of Orthofix necessary to assess Orthofix’s interactions with HCPs and HCIs and to identify potential or actual compliance violations. Results from the Compliance Reviews and Consultant Program Audits shall be compiled and reported to the Chief Compliance Officer for review and remediation as appropriate. Potential violations of Federal health care program or FDA requirements shall be reported to the Compliance Office for appropriate follow-up activity.

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In the event that a compliance issue is identified through the CMP, Orthofix shall investigate the incident consistent with established Policies and Procedures for the handling of investigations. As part of the formal investigation procedures, findings shall be made and all necessary and appropriate responsive action (including disciplinary action) and corrective action shall be taken, including the disclosure of Reportable Events pursuant to Section III.I above, as applicable.

Orthofix shall include a summary of the CMP and its results as part of each Annual Report. As part of each Annual Report, Orthofix also shall provide the OIG with copies of the Consultant Program Audit reports for any instances in which it was determined that an Orthofix employee engaged in improper conduct and a description of the action(s) that Orthofix took as a result of such determinations. Orthofix shall make the reports for all other CMP activities available to the OIG upon request.

IV.                                CHANGES TO BUSINESS UNITS OR LOCATIONS

A.                                   Change or Closure of Unit or Location

In the event that, after the Effective Date, Orthofix changes locations or closes a business unit or location related to the furnishing of items or services that may be reimbursed by Federal health care programs, Orthofix shall notify OIG of this fact as soon as possible, but no later than within 30 days after the date of change or closure of the location.

B.                                     Purchase or Establishment of New Unit or Location

In the event that, after the Effective Date, Orthofix purchases or establishes a new business unit or location related to the furnishing of items or services that may be reimbursed by Federal health care programs, Orthofix shall notify OIG at least 30 days prior to such purchase or the operation of the new business unit or location. This notification shall include the address of the new business unit or location, phone number, fax number, the location’s Medicare and state Medicaid program provider number and/or supplier number(s), and the name and address of each Medicare and state Medicaid program contractor to which Orthofix currently submits claims. Each new business unit or location and all Covered Persons at each new business unit or location shall be subject to the applicable requirements of this CIA.

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C.                                     Sale of Unit or Location

In the event that, after the Effective Date, Orthofix proposes to sell any or all of its business units or locations that are subject to this CIA, Orthofix shall notify OIG of the proposed sale at least 30 days prior to the sale of such business unit or location. This notification shall include a description of the business unit or location to be sold, a brief description of the terms of the sale, and the name and contact information of the prospective purchaser. This CIA shall be binding on the purchaser of such business unit or location, unless otherwise determined and agreed to in writing by the OIG.

V.                                    IMPLEMENTATION AND ANNUAL REPORTS

A.                                   Implementation Report

Within 150 days after the Effective Date, Orthofix shall submit a written report to OIG summarizing the status of its implementation of the requirements of this CIA (Implementation Report). The Implementation Report shall, at a minimum, include:

1.                                       the name, address, phone number, and position description of the Chief Compliance Officer required by Section III.A.1, and a summary of other noncompliance job responsibilities the Chief Compliance Officer may have;

2.                                       the names and positions of the members of the Compliance Committee required by Section III.A.2;

3.                                       the names of the members of the Audit Committee of the Board of Directors referenced in Section III.A.3;

4.                                       the names and positions of the Certifying Employees required by Section III.A.4;

5.                                       a copy of Orthofix’s Code of Conduct required by Section III.B.1;

6.                                       the number of individuals required to complete the Code of Conduct certification required by Section III.B.1, the percentage of individuals who have completed such certification, and an explanation of any exceptions (the documentation supporting this information shall be made available to OIG upon request);

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7.                                       a summary of all Policies and Procedures required by Section III.B.2 (copies of the Policies and Procedures shall be made available to OIG upon request);

8.                                       the following information regarding each type of training required by Section III.C:

a.                                       a description of such training, including a summary of the topics covered, the length of sessions, and a schedule of training sessions;

b.                                      the number of individuals required to be trained, percentage of individuals actually trained, and an explanation of any exceptions.

A copy of all training materials and the documentation supporting this information shall be made available to OIG upon request.

9.                                       a description of (a) the Focus Arrangements Tracking System required by Section III.D.2.a, (b) the internal review and approval process required by Section III.D.2.e; and (c) the tracking and monitoring procedures and other Focus Arrangements Procedures required by Sections III.D.2 and 3;

10.                                 a description of the Disclosure Program required by Section III.E;

11.                                 a description of the Internal Monitoring Program required by Section III.J;

12.                                 the following information regarding each IRO: (a) identity, address, and phone number; (b) a copy of the engagement letter; (c) information to demonstrate that the IRO has the qualifications outlined in Appendix A to this CIA, (d) a summary and description of any and all current and prior engagements and agreements between Orthofix and the IRO; and (e) a certification from the IRO regarding its professional independence and objectivity with respect to Orthofix;

13.                                 a description of the process by which Orthofix fulfills the requirements of Section III.F regarding Ineligible Persons;

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14.                                 the name, title, and responsibilities of any person who is determined to be an Ineligible Person under Section III.F; the actions taken in response to the screening and removal obligations set forth in Section III.F;

15.                                 a list of all of Orthofix’s United States locations (including locations and mailing addresses); the corresponding name under which each location is doing business; the corresponding phone numbers and fax numbers; each location’s Medicare and state Medicaid program provider number(s) and/or supplier number(s); and the name and address of each Medicare and state Medicaid program contractor to which Orthofix currently submits claims;

16.                                 a description of Orthofix’s corporate structure, including identification of any parent and sister companies, subsidiaries, and their respective lines of business; and

17.                                 the certifications required by Section V.C.

B.                                     Annual Reports

Orthofix shall submit to OIG annually a report with respect to the status of, and findings regarding, Orthofix’s compliance activities for each of the five Reporting Periods (Annual Report). Each Annual Report shall include, at a minimum: