US attorney announces USD 25.5M settlement in fraud billing case

Damian Williams, the United States Attorney for the Southern District of New York; Naomi Gruchacz, the Special Agent in Charge of the New York Regional Office of the U.S. Department of Health and Human Services, Office of Inspector General; Brian J. Solecki, the Acting Special Agent in Charge of the Northeast Field Office of the U.S. Department of Defense Office of Inspector General, Defense Criminal Investigative Service; Derek M. Holt, the Special Agent in Charge of the Office of Personnel Management, Office of the Inspector General; and Michael J. Waters, the Special Agent in Charge of the Eastern Field Office of the Amtrak Office of Inspector General, announced that the United States has settled a civil fraud lawsuit against LINCARE INC., a large durable medical equipment supplier with approximately 700 locations throughout the United States. The settlement resolves claims that LINCARE violated the False Claims Act by fraudulently continuing to bill federal health care programs for the rental of costly non-invasive ventilators (“NIVs”) when patients no longer needed or used the devices. The settlement also resolves claims that LINCARE violated the Anti-Kickback Statute by waiving coinsurance payments to induce certain Medicare and TRICARE beneficiaries to rent NIVs.

Under the settlement, which was approved yesterday by U.S. District Judge Paul G. Gardephe, LINCARE agreed to pay a total sum of $25.5 million, of which $24,228,517.96 will be paid to the United States and the remainder will be paid to various states. As part of the settlement, LINCARE also made factual admissions regarding its conduct. LINCARE admitted that it received reimbursement from federal health care programs for some NIV rental claims that did not comply with all of those programs’ billing rules and guidance. LINCARE also admitted that in some instances, it continued to seek monthly payments when it was aware that patients were not using the devices.

U.S. Attorney Damian Williams said: “When DME suppliers like Lincare knowingly seek federal funds for items that are not medically necessary and not being used, they threaten the sustainability and financial integrity of vital federal health care programs like Medicare and Medicaid. Companies will be held accountable for fraudulent billing practices that prioritize profits over legal obligations.”

HHS-OIG Special Agent in Charge Naomi Gruchacz said: “Individuals and entities that participate in the federal health care system are required to obey the laws meant to preserve the integrity of program funds and the provision of appropriate, quality services to patients. Our agency, working closely with our law enforcement partners, will continue to hold health care providers responsible for receiving improper payments from federal health care programs.”

DCIS Acting Special Agent in Charge Brian J. Solecki said: “This settlement makes clear that firms will pay a price for attempting to defraud the government. We, along with our federal partners, are committed to protecting taxpayers from companies that engage in deceptive practices.”

OPM-OIG Special Agent in Charge Derek M. Holt said: “I applaud the excellent work of our investigators and law enforcement partners on this case. We take all false claims seriously as the integrity of the federal health care programs relies on the submission of medically reasonable and necessary claims.”

Amtrak-OIG Special Agent in Charge Michael J. Waters said: “The favorable outcome in this case is a testament to the professionalism and teamwork displayed by our agents, our fellow investigative agencies, and the U.S. Attorney’s Office. We are very proud of this well-coordinated joint effort.”

As alleged in the Complaint filed in Manhattan federal court:

NIVs are a type of respiratory equipment designed to deliver pressurized air into the lungs of patients with respiratory failure. Patients frequently rent NIVs for regular use in their homes. During the period of January 1, 2013, through February 29, 2020 (the “Relevant Period”), Medicare and other federal health care programs reimbursed DME suppliers like LINCARE as much as $1,400 per month for supplying NIV rentals to patients.

When DME suppliers like LINCARE rent NIVs to federal health care program beneficiaries and seek reimbursement for such rentals, the DME suppliers must ensure that the NIVs continue to be used and that they remain medically reasonable and necessary during the rental period. For example, under Medicare, a DME supplier is required to monitor the extent to which the beneficiary is using the NIV at home and to maintain documentation to support that the device continues to be used and is medically reasonable and necessary. In addition, DME suppliers must discontinue billing federal health care programs when the NIV is no longer being used and is not medically reasonable and necessary.

LINCARE often continued to submit monthly claims for payments to federal health care programs when the NIVs were no longer medically necessary or the beneficiary had stopped using the device. LINCARE frequently did not know, or have documentation to support, that a patient continued to use or need the NIV. LINCARE nonetheless continued to seek monthly payments from federal health care programs for these NIV rentals.

LINCARE’s primary method to monitor patient usage of NIVs was by having their Respiratory Therapists (“RTs”) conduct home visits, during which RTs would evaluate the device’s settings, usage, and need for maintenance. As part of these “vent checks,” RTs were supposed to record the extent to which patients had been using the NIVs and confirm that they were using their devices as directed by their physicians. Under LINCARE’s own policy, home visits were supposed to occur at least every 60 days. However, LINCARE’s RTs frequently failed to comply with this policy; on tens of thousands of occasions during the Relevant Period, LINCARE failed to perform home visits for NIV patients as required by its policy. Further, when RTs did conduct vent checks, they often failed to record whether, and for how many hours, patients had used their NIVs. In some instances, LINCARE continued to seek monthly payments from federal health care programs when it was aware, through home visits and vent checks conducted by its RTs, that beneficiaries had stopped using their devices. LINCARE billed for NIVs in instances when the beneficiary had not used or had very rarely used the device for over a year.

Finally, in violation of the Anti-Kickback Statute, LINCARE’s Regional Vice Presidents waived, either partially or in full, the coinsurance payment due from certain Medicare and TRICARE beneficiaries in an effort to persuade them to rent NIVs from LINCARE instead of another DME supplier. These coinsurance payment waivers were not based on an individualized assessment of the beneficiaries’ financial needs.

As part of the settlement, LINCARE admitted and accepted responsibility for certain conduct alleged by the United States, including the following:

• In violation of LINCARE’s internal protocols, LINCARE’s center clinical staff frequently failed to visit NIV patients every 60 days to confirm that the patients were using their NIVs as directed by their physicians.  Some centers lacked sufficient staff to adequately monitor patient progress and confirm that patients were using the devices as directed by their physicians.  On many occasions, clinical staff did not perform home visits for NIV patients for several months.
• In addition to conducting patient visits, LINCARE had the ability to remotely monitor certain patients’ NIV usage for certain newer NIV models through online cloud-based platforms.  However, LINCARE did not use these systems to confirm that those patients were using the devices as directed.
• LINCARE continued to seek monthly payments from federal health care programs for NIV rentals in many instances when its staff had not verified that patients were still using their NIVs or had not maintained documentation showing that the patient continued to use the devices.
• In some instances, LINCARE continued to seek monthly payments from federal health care programs when it was aware that patients were not using the devices.
• On certain occasions, LINCARE granted coinsurance payment waivers that were not based on the patient’s financial need in order to persuade patients to rent NIVs.
• As a result of the above-referenced conduct, LINCARE received reimbursements from federal health care programs for some NIV rental claims that did not comply with all of those programs’ billing rules and guidance.

In connection with the filing of the lawsuit and settlement, the Government joined a private whistleblower lawsuit that had been filed under seal pursuant to the False Claims Act. Department of Justice