A Nashville medical device manufacturer agreed to pay the U.S. government more than $2.7 million to settle a False Claims Act lawsuit brought by a whistleblower who claimed the company’s marketing practices caused suppliers to overbill Medicare for its products.
The U.S. Attorney for the Middle District of Tennessee announced the settlement June 29, saying that Innovative Therapies and its parent company Cardinal Health Inc., which purchased Innovative in 2014, will pay the U.S. $2.715 million to resolve the whistleblower lawsuit.
According to the U.S. Attorney’s office, Innovative Therapies and Cardinal Health wrongfully marketed the Quantum-brand line of negative pressure wound treatment devices, which was later named PRO after the acquisition, as durable medical equipment despite knowing that these devices did not have the expected life of a durable device.
Federal prosecutors claimed the devices were pre-programmed with a specific number of therapy hours well below the expected life of a durable device and that these devices were never used again once their hours expired. This marketing scheme allegedly caused suppliers to bill Medicare for durable medical devices when they did not meet the standards for a durable device, resulting in the submission of false claims.
“This case is a good example of how the False Claims Act protects taxpayer dollars,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services in Atlanta, who helped investigate the case. “The money recovered will be transferred back to federal health care programs where it can be used to provide medical services for the elderly and disabled.”
The False Claims Act lawsuit was filed in 2015 by a former employee of Innovative Therapies who will receive a whistleblower award of about $488,700.