Orthofix Executives' Termination Sparks Legal Battle, Revealing Inappropriate Conduct

In a shocking turn of events for the medical device industry, new details have emerged regarding the abrupt termination of Orthofix Medical's top executives in 2023. The firings, which initially rattled investors and caused a 30% drop in the company's stock price, are now at the center of a legal battle that has brought to light alleged inappropriate conduct and violations of company policies.

Executive Terminations and Subsequent Lawsuit

Orthofix Medical, a Lewisville, Texas-based company, fired its then-CEO Keith Valentine, CFO John Bostjancic, and Chief Legal Officer Patrick Keran in 2023 "for cause." The company cited an investigation by outside legal counsel that found the executives had "engaged in repeated inappropriate and offensive conduct that violated multiple code of conduct requirements."

In September 2024, the terminated executives filed a lawsuit against former board chair Catherine Burzik and current board member Wayne Burris. The suit alleges defamation, invasion of privacy, and misrepresentation related to the collection and imaging of their personal mobile phones during the investigation.

Revelations of Inappropriate Conduct

Recent court filings have shed light on the nature of the misconduct that led to the executives' termination. According to the defendants' motion to strike, Orthofix uncovered evidence of "gross and improper sexist, homophobic, racist, and other vulgar and demeaning comments" made by the former executives about co-workers.

The filing states that "graphic commentary was often made during meetings and calls while the very individuals that the former executives demeaned were speaking." Examples of inappropriate behavior include:

• Exchanging lewd and racist private texts
• Making sexist comments about female participants in investor meetings
• Using profanity to express frustration with auditors
• Engaging in bullying and mistreatment of Orthofix employees

The defendants argue that this behavior "more than justified" the executives' termination, asserting that such conduct is not permissible in the workplace.

Legal Arguments and Company Response

The terminated executives' lawsuit contends that the private texts were not relevant to the investigation and that the company's code of conduct is unclear regarding private communications. They argue that the texts were mostly from 2022, before they were Orthofix employees, and were exchanges between long-time colleagues with "a shared sense of humor."

Orthofix, while not a party to this particular lawsuit, has stated in its February 10-K filing that several litigation and arbitration matters are pending in connection with the terminations. The company disagrees with the allegations in the arbitration demands and the action against Burzik and Burris, and intends to "vigorously defend the asserted claims."

As this legal battle unfolds, it highlights the importance of workplace conduct and the potential consequences of inappropriate behavior, even in private communications. The case serves as a stark reminder for executives in the pharmaceutical and medical device industries of the need to maintain professional standards at all times.