Large Durable Medical Equipment Company to Settle False Claims Act Allegations by Paying U.S. $37.5 Million
A Southern California-based company doing business in South Carolina, Iowa, New York, and other states through manufacturing and distribution of durable medical equipment (DME) for sleep apnea and other sleep-related disorders will pay more than $37.5 million to resolve allegations under the False Claims Act. These allegations include paying kickbacks to DME suppliers, sleep labs, and other healthcare providers.
The settlement resolves allegations that the DME manufacturing company did the following:
- Provided DME companies/suppliers with free telephone call-center services and other free patient outreach services that enabled these companies to reorder supplies for their patients with sleep apnea;
- Provided sleep labs with free and below-cost positive airway pressure masks and diagnostic machines, as well as free installation of these machines;
- Arranged for and fully guaranteed the payments due on interest-free loans that DME suppliers acquired from third-party financial institutions for purchase of the manufacturer’s equipment; and
- Provided non-sleep specialist physicians free home sleep-testing devices, referred to as “ApneaLink.”
The federal Anti-Kickback Statute prohibits the knowing and willful payment of any remuneration to induce the referral of services or items that are paid for by a federal healthcare program, such as Medicare, Medicaid, or TRICARE. Claims submitted to these programs in violation of the Anti-Kickback Statute give rise to liability under the False Claims Act.
The settlement resolves five whistleblower lawsuits that were originally filed under the False Claims Act.
Compliance Perspective
Acceptance of payment or any type of remuneration by a nursing home from manufacturers or suppliers of durable medical equipment (DME) as an incentive to use that manufacturer’s or supplier’s DME is a violation of the federal Anti-Kickback Statute and could result in the submission of false claims, in violation of the False Claims Act.
Discussion Points:
- Review policies and procedures regarding compliance with the Anti-Kickback Statute and avoiding violations of the False Claims Act.
- Train all staff involved in the use or purchase of DME for the facility about the prohibition of accepting kickbacks, and what constitutes a kickback.
- Periodically audit to determine if the facility or staff may have been offered or received any type of remuneration by a DME manufacturer or supplier, and address any negative activities discovered.
FRAUD MODULE 3 – MASTERING LEGAL IMPLICATIONS AND ANTITRUST LAWS
