Free Call Center Services Cost PA Company $34.8 Million in Kickback Case

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Crop doctor with stethoscope in hospital, representing hospice fraud and medical malpractice reform

Health care kickbacks continue to be a hot area of whistleblower practice under the False Claims Act in 2016, with two more settlement announcements already this week.

A Pennsylvania medical supply company providing masks to suppliers of durable medical equipment (DME) for patients with sleep apnea settled a False Claims Act case today for $34.8 million. The case alleged that the equipment provider offered free call center services as kickbacks to induce patient referrals.

The Anti-Kickback Statute prohibits the payment of remuneration to induce referrals of items paid for by a federal government healthcare program such as Medicaid or Medicare. The law aims to limit incentives for health care providers to treat patients based on judgement compromised by illegal payments offered by equipment manufacturers. Actions deemed legitimate by the U.S. Government are included within legislative and regulatory safe harbors to allow practices which could potentially implicate the statute but are not considered objectionable.

The amended complaint alleged that the supply company acquired a call center and offered the services of the call center to patients using its masks. For those patients not using its masks, the company billed the doctor every month for the service on a per patient basis. According to the amended complaint, providers began using the company’s products because of the free call center services and tight margins in the CPAP industry.

The lawsuit was filed under the False Claims Act by a whistleblower. The FCA permits individuals with evidence of health care fraud to recover between 15 and 30 percent of the government’s recovery in a case. The whistleblower who filed this case will receive just over $5 million.

In a separate case, a medical device manufacturer announced in an SEC filing an agreement to resolve a kickback and off-label marketing case against it brought by a whistleblower for $8 million. The complaint alleged that the medical device company offered all-expense paid training programs, sham payments to high volume prescribers, and free product as kickbacks for referrals of federal healthcare program business.

For additional information about reporting kickbacks in the healthcare industry, contact one of our False Claims Act attorneys.