Taxpayer dollars fund the use of medical devices and durable medical equipment (DME) for many patients who are part of Medicare, Medicaid, TRICARE, and other federal healthcare programs. Durable medical equipment may be used regularly by patients as part of their lives and in their homes, such as wheelchairs, power scooters, glucose testing strips, prosthetics, orthotics, and more. They may also be used by doctors and healthcare professionals to give care, like hospital beds, oxygen equipment, and patient lifts.
Unfortunately, medical device fraud is one of the largest sources of healthcare fraud in the United States today. When unethical medical providers and manufacturers attempt to skirt regulations and profit off of public healthcare, they reduce the pool of funds available, make risky decisions for the patients who rely on them, and line their own pockets at the expense of those who contribute to the system.
In 2022, the Department of Justice recovered over $1.7 billion in healthcare fraud settlements from durable medical equipment fraud, false claims from drug and medical device manufacturers, physician kickbacks, and more. Medical device fraud is an important area of financial loss and recovery across all 50 states as well as under federal law. If you suspect you have information that might lead to you becoming a medical device fraud whistleblower, contact our office today.
The medical device fraud lawyers at Tycko & Zavareei LLP can advise you on how to file your claim, what kinds of proof will be necessary to build your medical device fraud case, how to protect your anonymity and insulate yourself against liability, as well as how to collect the largest possible whistleblower reward.
What is Medical Device Fraud?
Medical devices and durable medical equipment (DME) run the gamut of wheelchairs to respirators, blood glucose strips to prosthetic limbs. Medical devices and DME must be registered with the Food and Drug Administration (FDA) in order to ensure their safety and efficacy. However, medical device fraud often occurs whenever manufacturers, physicians, or other healthcare professionals attempt to wrongfully claim insurance reimbursement payments related to the use of DME.
DME (durable medical equipment) fraud and medical device fraud costs taxpayers millions of dollars each year. Spotting it can save patients time, money, and difficulty, as well as protect the integrity of Medicaid, Medicare, and VA insurances.
Examples of Medical Device Fraud
Medical device fraud and abuse may take many different forms, from provider kickbacks to off-label marketing, improper billing, and more. The scope of medical device fraud is unfortunately only limited by a profit-driven provider’s imagination and their willingness to take advantage of patients. For this reason, medical device fraud whistleblowers, especially insiders in the healthcare field, are especially valuable when it comes to combatting false and improper claims. The following are some common ways in which medical device fraud is perpetrated:
Defective Devices
When devices are marketed that do not comply with FDA regulation or fail to meet Quality Management specifications, they may be unsafe for use by patients. Manufacturers who push through certification of these defective devices cheat the taxpayer as well as put patients at risk of harm.
Improper Billing
In many DME fraud cases, medical devices are billed under different codes than they should be in order to increase reimbursement amounts. Sleep apnea devices may be billed as more expensive respirators, walkers may be billed as electric wheelchairs, and more.
Prescribing Unnecessary Medical Devices and DME
In some medical device fraud scams, telehealth professionals prescribe DME to patients they never actually see or speak to past a single phone call. In others, patients with diverse needs are all prescribed the same high-cost medical device in order to increase a practice’s billing. Both are examples of prescriber fraud related to medical devices.
Off-Label Marketing
Durable medical equipment is strictly monitored by the FDA, not only in how it is made but also how it is meant to be used. When companies seek to promote or market their devices for un-tested or un-approved use, they make false claims about their products’ capabilities. These instances of off-label marketing might result in a patient receiving the wrong kind of treatment or being given an ineffective device for their needs.
Using Unlicensed Medical Equipment Personnel
Many medical devices require specialty training to understand how to properly fit them and instruct patients about their use. When unlicensed or untrained personnel are employed to prescribe DME or treat patients with DME needs, reimbursement for their services is considered fraud under federal healthcare laws.
Medical Device Fraud Laws
Medical devices fraud violates the federal False Claims Act, as well as many state equivalent laws and healthcare statutes. Under the False Claims Act, knowingly making or causing to make false statements to the government in order to keep or receive funds (such as Medicaid reimbursement payments) results in civil liability.
The False Claims Act imposes treble liability per the submission of each false claim. Penalties, which are linked to inflation rates, are assessed per claim. Because of this, cases of ongoing or extensive medical device fraud often see settlements that quickly climb into the hundreds of thousands or million dollar range.
Under the False Claims Act, average people are empowered to act as qui tam relators, or whistleblowers. Qui tam relators can recover up to 30% of a successful fraud settlement resulting from their information.
How to Report Medical Device Fraud
To report medical device fraud, contact a medical device fraud whistleblower attorney. Our office will be able to advise you about what kinds of proof you will need and how to file your claim with the Department of Justice.
What evidence you will need in order to convince federal investigators to take on your case varies depending on the specifics of the fraud alleged, your own position as a whistleblower, as well as the reputation of the qui tam firm bringing the case. In some medical device fraud claims, when for instance a billing professional is the whistleblower, you may be able to share access to improperly filed reimbursement codes and patient files. As a physician or other medical professional, you may be able to testify to kickbacks that you were either offered or saw others in your field receive. Whatever evidence you need to build the most compelling case possible, our experienced DME fraud whistleblower lawyers can help you assemble it and protect your own anonymity while filing.
Becoming a whistleblower is the right thing to do to protect the public interest as well as vulnerable patients. It also protects your own interests in two ways:
- You may be eligible for a whistleblower reward. If you are the first to share information that is previously unreported, you may be able to collect up to 30% of a successful settlement as a result of your disclosure.
- It protects you against employer retaliation and insulates your own professional reputation. Some kinds of healthcare fraud, including the offering or receipt of kickbacks, result in both civil as well as criminal liability, and can be prosecuted as a felony. Those who participate in it may be permanently barred from receiving federal healthcare reimbursements in the future. Additionally, whistleblowers can receive protections against employer harassment, discrimination, and reduction of pay or hours. If you have information about fraud in the healthcare profession, it is in your own best interests to speak to a qualified whistleblower lawyer about it and receive protections against retaliation. Doing so can also demonstrate that you are not aligned with the fraud and abuse perpetrated by your employer.
Medical Device Fraud Settlements
The following are some notable medical device fraud settlements that resulted in substantial recovery of defrauded funds:
- $5.3 million settlement in false billing for respiratory devices case: A Pennsylvania provider of durable medical equipment was ordered to pay over $5 million to settle claims that they routinely overcharged Medicaid for the use of respiratory devices that were not needed or used by patients. The company, AdaptHealth, was found to have billed federal healthcare programs for non-invasive ventilators (“NIVs”) when a patient was instead prescribed a much less expensive BiPAP machine. The provider also continued to bill long after patients no longer needed their DME, as well as double-billed federal programs for rentals in numerous cases. The case was brought under the False Claims Act. U.S. Attorney Jacqueline C. Romero said about the settlement, “The integrity of our health care system depends on the government being able to rely on durable medical equipment providers to seek reimbursement for only those devices a doctor has prescribed for their patient and that the patient actually needs and uses.”
- $1.2 billion in losses stolen from older and disabled patients in a wide-reaching telemedicine scheme: 2019 saw one of the largest healthcare fraud enforcement actions ever undertaken by the FBI, U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG), and Department of Justice. A total of 24 defendants were charged for a telehealth scheme involving illegal kickbacks and bribes from DME companies in exchange for referrals of patients with Medicare coverage. Using an international telemarketing network, thousands of elderly and disabled patients were lured into a network of telehealth providers who were paid to prescribe DME to these patients without seeing or consulting with them past a brief phone call. The proceeds from the wrongfully prescribed DME were laundered through shell corporations and used to purchase yachts, fancy automobiles, and luxury real estate in the US and beyond. The patients, who were often truly requiring medical attention, were denied the opportunity to receive meaningful care for their needs. Additionally, the Center for Medicare Services, Center for Program Integrity (CMS/CPI) announced that it took actions against an additional 130 DME companies that had submitted over $1.7 billion in false claims and were paid over $900 million.
- $500,000 in federal and state False Claims Act settlement for Medicaid fraud from medical device manufacturer: In a case involving both federal as well as state liability, an Illinois medical device manufacturer agreed to pay $500,000 to settle fraud charges under the Federal and North Carolina False Claims Acts. From 2012 to 2021, the Illinois company was accused of billing North Carolina Medicaid for its “EZ” range-of-motion devices, despite not meeting state requirements to do so. The company, Joint Active Systems Inc (JAS), allegedly directed North Carolina providers to bill for their devices as covered “L-Code” orthotics, and paid local providers to do so instead of submitting claims under the non-reimbursable but correct “E-Code.”
- $152,000 settlement for medically unnecessary DME claims sent to the Veterans Administration: This $152,000 settlement comes from a physical therapy clinic owner who both accepted illegal kickbacks as well as prescribed medically unnecessary DME to veterans and VA patients. The case also alleges that the clinic owner, who never personally examined or treated the VA patients concerned in the case, also gave a copy of his signature to the DME salesperson who would use it to fill out paperwork and invoice the VA for the devices. The patients were never instructed on how to safely or effectively use the devices which they were prescribed, most of which they did not need. “Prescribing devices to VA patients that are not medically necessary is dangerous and wastes important resources intended to help our nation’s veterans,” said the US attorney attached to the case.
Contact a Medical Device Fraud Lawyer
Medical device fraud is one of the largest areas of healthcare fraud and often comes at a high price for taxpayers. In order to report medical device fraud, contact our medical device fraud law firm today. The medical device fraud lawyers with Tycko & Zavareei LLP are available for a complimentary and confidential consultation about the specifics of your case.