Medical Device & Durable Medical Equipment Fraud
FRAUD IN THE HEALTHCARE SYSTEM
Two major components of healthcare are medical devices and durable medical equipment:
- A medical device is something that is not a drug that is used to diagnose and treat a person, like a tongue depressor.
- Durable medical equipment (DME) is a term used to identify equipment that provides therapeutic benefits to patients that can bear repeated use, like wheelchairs or oxygen tanks.
Because medical devices and DME’s are a major source of healthcare spending, dishonest medical device manufacturers can defraud the federal government in several ways. For example, medical device manufactures can illegally pay kickbacks (or bribes) to doctors to encourage them to prescribe their products. Manufacturers can also falsely market their products by claiming uses that have not yet been approved. Both healthcare providers and medical device manufacturers can fraudulently cost the government and the healthcare system millions.
Whistleblowers are essential to stopping medical devices and DME fraud. With the help of an experienced fraud attorney, whistleblowers can receive a significant award and help prevent injustice in the healthcare system.
WHAT IS MEDICAL DEVICE FRAUD?
A medical device is any machine, software, instrument or implant used to diagnose, cure, treat or prevent disease. Examples of medical devices include:
- Bedpan
- Stethoscope
- Pacemaker
- Surgical laser
Medical device manufacturers are incentivized to sell as much of their product as possible. Since they make equipment used to diagnose and treat disease, their market is almost entirely made up of healthcare providers and physicians. Their business interests drive them to market their products aggressively to doctors and hospitals—this is where medical device fraud can occur. This type of Medicare fraud is wide-ranging and can include:
- Paying kickbacks or bribes to health care providers to use their devices
- Charging a government healthcare program more than private insurance for use of devices
- Advising hospitals to up-code procedures that use their devices
- Falsely marketing devices that have not been approved by the FDA or have not been approved for the purpose for which they are marketed
- Promoting surgeries using their devices when non-surgical options are more appropriate
- Knowingly selling defective devices
There are many fraudulent schemes by medical device manufacturers and the providers that use them—a whistleblower attorney is necessary to help prevent fraudulent action.
WHAT IS DURABLE MEDICAL EQUIPMENT FRAUD?
DME are devices that provide therapeutic relief of benefit for patients. DME fraud includes fraudulently billing for durable medical equipment like:
- Wheelchairs, walkers and canes
- Crutches
- Power mobility devices
- Oxygen tanks and equipment
- Hospital beds
- Traction equipment
- Blood sugar monitors
- Insulin pumps
- Breast pumps
- Eyeglasses and contact lenses
- Hearing aids
DME makes up a large portion of healthcare spending—providers spent approximately $54.4 billion in 2017 alone. This leaves a lot of room for DME fraud.
DME manufacturers and suppliers are incentivized in ways very similar to medical device manufacturers. In order for Medicare to cover the cost of DME, a doctor must issue a certificate of medical necessity. Once that is completed, the supplier of the DME fulfills the order and files a claim for payment from Medicare. Thus, it’s in the DME manufacturer’s interest to have certificates of medical need issued for their products as often as possible. And, if the manufacturer has folded a provider or physician into a DME scheme, that provider can also become part of the fraud. Examples of DME fraud include:
- Falsely certifying that DME is medically necessary
- Paying kickbacks or bribes to providers to gain DME referrals
- Violating the Stark Law by a doctor referring patients for certain DME where the physician holds a financial interest in the company referred to
- Billing for DME that was not ordered by the treating physician
- Billing for DME that was never provided to patients
- Upcoding DME, i.e. billing for a more expensive class of DME than was actually provided
- Billing for maintenance of DME when none is performed
- Not crediting the government for DME that is returned by patients after use
- Providing defective equipment
Providers and DME manufacturers may illegally seek compensation for durable medical equipment by fraudulent billing, upcoding, or violating kickback law.
HOW THE FALSE CLAIMS ACT PROTECTS & BENEFITS WHISTLEBLOWERS
When a healthcare provider, medical device manufacturer/distributor, or a durable medical equipment manufacturer/distributor seeks payment from a government healthcare program for services or items rendered, they do so pursuant to agreements with the government. This makes them government contractors and subject to the False Claims Act (FCA).
Among other things, the FCA provides the government the right to recoup up to three times the funds it has spent that arise out of false claims for payment. The FCA also allows those with knowledge of the fraudulent false claims for payment to file suit on behalf of the government to recoup these funds. This is known as qui tam litigation.
When a whistleblower files a case alleging medical device or durable medical equipment fraud, they do so under seal. This means that the suit remains confidential. The whistleblower is also entitled to statutory employment protection. They cannot be retaliated against in their employment (through firing or other adverse employment action) by seeking to expose the medical device or DME scheme.
A whistleblower is also entitled to a statutory award in the form of money for bringing a successful FCA suit. The amount of this award can range between 10% and 30% of the total amount recovered depending on the type of information the whistleblower provides.
REWARDS FOR RECENT MEDICAL DEVICE FALSE CLAIMS ACT CASES
The award for a medical device or DME fraud case can be significant. In recent years, medical device manufacturers have paid heavily for their false claims for payment with resolutions ranging from $3 million to $30 million. Major DME manufacturers and distributors have likewise been held accountable through FCA cases, with government recovery ranging between $4 million and $41 million.
THE ATTORNEYS AT PRICE ARMSTRONG CAN HELP
A well-intentioned whistleblower who does not know their legal rights and options can suffer severe professional and monetary harm all in their effort to protect their profession and the healthcare system. The whistleblower attorneys at Price Armstrong are here to help.
If you have knowledge regarding medical device or DME fraud, an attorney at Price Armstrong is available to provide a confidential, free consultation to discuss your rights and options.
CONTACT US FOR A FREE CASE EVALUATION
If you have evidence of past or ongoing medical device or durable medical equipment fraud, contact the attorneys at Price Armstrong. We can help you seek justice and protect your rights throughout the process. We represent clients nationwide with offices in Birmingham, AL, Tallahassee, FL and Albany, GA. Call us today at (205) 208-9588 for a free initial consultation and review of your case. Let us fight for you – call now!
