A medical oxygen equipment provider agreed Tuesday to pay $11.4 million to resolve a whistleblower’s False Claims Act lawsuit alleging it billed Medicare and other government health care programs for oxygen equipment provided without a physician’s authorization and for sleep therapy equipment supplied as part of a kickback scheme.
According to the whistleblower complaint, California-based Pacific Pulmonary Services began submitting claims to the Medicare, TRICARE, and Federal Employee Health Benefits programs for home oxygen and oxygen equipment without obtaining a physician authorization as required by the rules of the health care programs. The suit alleged that Pacific Pulmonary started operating in this manner sometime around 2004.
Starting in 2006, some of the company’s patient care coordinators also agreed to make patient referrals to sleep testing clinics in exchange for the clinics’ agreement to refer patients to Pacific Pulmonary Services for sleep therapy equipment.
According to the complaint, these arrangements violated the Anti-Kickback Act, which prohibits offering, paying, soliciting, or receiving payment or other enticements to coax referrals of items or services covered by Medicare, Medicaid, and other federally funded programs.
U.S. Attorney Brian J. Stretch for the Northern District of California said that it is prepared to take action “against companies that disregard patients’ medical needs in pursuit of company profits,” adding that federal health care beneficiaries “expect and deserve medical care that is free from any undue influence and complies with the program safeguards that are in place to protect patients.”
Department of Health and Human Services Special Agent Steven J. Ryan said that home oxygen equipment and the supplies that go with it “are some of the most fraudulently billed items of durable medical equipment.”
“Medicare suppliers more concerned with profits than compliance will be met with investigation and enforcement,” Mr. Ryan said.
The original complaint was filed by Manuel Alcaine, a former Pacific Pulmonary Services sales representative. Mr. Alcaine filed the lawsuit in a San Francisco federal court under the whistleblower provisions of the False Claims Act. He will receive $1.824 million of the total settlement as a whistleblower award.