A California-based manufacturer of durable medical equipment (DME) agreed to pay the Federal government $37.5 million to resolve allegations that it violated the False Claims Act by paying kickbacks to health care providers in exchange for prescribing patients its sleep apnea equipment.
According to prosecutors, the firm provided DME companies with patient-outreach services at no cost to them that allowed providers to reorder the equipment they sold. The firm also allegedly provided sleep labs with subsidized or free sleep apnea masks and diagnostic machines and free installation of those machines.
In addition, prosecutors say the firm arranged for interest-free loans from third-party lenders to aid DME companies in buying their equipment. The firm is also alleged to have provided non-specialists for free home sleep testing devices.
According to Federal prosecutors, such incentives run afoul of the Anti-Kickback Statute, which prohibits remuneration to encourage the purchase of goods or services that are reimbursed by Federal health insurance programs like Medicare, Medicaid, and TRICARE. In turn, claims to Federal health insurance programs generated contrary to the Anti-Kickback Statute are in violation of the False Claims Act (a/k/a, “Lincoln’s Law”).
In addition to paying the federal government a settlement amount of $37.5 million, the California firm has agreed to enter into a Corporate Integrity Agreement (CIA) with the Department of Health and Human Services Office of Inspector General. The program mandates that the firm enact additional safeguards around product sales and pricing, and that the firm carry out internal and external monitoring of referrals.
The claims against the firm arose out of the qui tam, or “whistleblower” provisions of the False Claims Act, which allows individuals to file suit on the government’s behalf, which will be taken over by federal prosecutors if they find merit in the claims.
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