Last week, the Department of Justice announced a settlement between the United States, the state of Tennessee, and AmMed Direct LLC for $18 million. The settlement resolves False Claims Act allegations brought against the company under the qui tam provisions of the Act. According to the settlement, AmMed will pay $17,560,997 to the US government and $439,003 to Tennessee.
Medicare rules forbid healthcare companies from calling beneficiaries to sell them products without their prior consent. In order to get around this regulation, AmMed allegedly advertised free cookbooks in order to induce Medicare beneficiaries to independently contact the company. Once the individuals calling for the free cookbooks were on the phone, AmMed sales representatives would confirm that the individuals were, in fact, beneficiaries. They would then improperly try to sell the individuals medical supplies that were covered by Medicare. The company was also accused of improperly billing Medicare for these supplies.
Additionally, according to the complaint, many beneficiaries who ordered AmMed supplies through the sham marketing scheme ended up returning the supplies. Instead of reimbursing Medicare and TennCare (Tennessee’s Medicaid program) for the returned supplies, AmMed was accused of keeping the money. Notably, before AmMed became aware of this lawsuit, they informed Medicare about their failure to refund money for the returned supplies. The company started paying the refunds to both Medicare and TennCare at that time.
The Tennessee government and the federal government were alerted to AmMed’s fraud by whistleblower Bryan McNeese. McNeese, a former AmMed employee, filed his qui tam lawsuit in 2009 in Nashville, Tennessee. McNeese will receive a $2.88 million share of the settlement as a reward for alerting the government about AmMed’s alleged wrongdoing.
It has become all too common in the healthcare industry for durable medical equipment suppliers to market and provide medical supplies to seniors that are unnecessary and unwanted. The Medicare system is facing a debt crisis due, at least in part, to rampant waste and fraud. The more often brave and patriotic whistleblowers step forward, the more likely it is that the waste and fraud will be diminished and Medicare’s long term viability improved. To find out more about this case, or to learn about how whistleblowers can combat fraud, please visit our website at www.fraudfighters.net.