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Pocket ECG Device Companies Over-bill Medicare, Pay $13.4 Million to Resolve FCA Case

heart-art-300x200Remote heart monitoring companies agreed to pay the U.S. Department of Justice (“DOJ”) $13.4 million to resolve allegations that they violated the False Claims Act (“FCA”) by billing Medicare for higher, more expensive, levels of cardiac monitoring services than requested by physicians.

The settlement resolves allegations that the companies “up-charged” Medicare and other government health programs for services they did not provide, or for which the bills submitted were inappropriate in relation to the services provided.

The Department of Justice alleged that AMI Monitoring Inc. aka Spectocor, its owner, Joseph Bogdan, Medi-Lynx Cardiac Monitoring LLC, and Medicalgorithmics SA, the current majority owner of Medi-Lynx Cardiac Monitoring LLC, fraudulently increased medical bills for non-existent or unnecessary medical treatments.

From 2011 through 2016, Spectocor and Joseph Bogdan allegedly marketed the Pocket ECG as capable of performing three separate types of cardiac monitoring services—holter, event, and telemetry. “When a physician sought to enroll a patient for Pocket ECG, however, the enrollment process allegedly only allowed the physician to enroll in Pocket ECG for the service which provided the highest rate of reimbursement provided by a patient’s insurance, thus steering the ordering physician to a costlier level of service,” the DOJ stated.

Sophisticated medical technology can be used to help doctors dramatically improve the lives of their patients, but it can also be misused to fraudulently increase medical bills. Here, the DOJ alleged that advancements in technology made it easier for the companies to defraud Medicare.

The settlements resolve allegations filed in a lawsuit by Eben Steele, a former sales manager at Spectocor. The lawsuit was filed in a federal court in Newark, New Jersey, under the qui tam, or “whistleblower,” provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.

The Act also allows the government to intervene and take over the action, as it did in this case. Mr. Steele will receive approximately $2.4 million from the two settlements, of the $13.4 million that the government recovered.

Insiders such as Mr. Steele often have unique access to evidence of fraud schemes. Complicated programs like Medicare are the most vulnerable to fraud, and only through the brave action of whistleblowers can the windfalls of fraud be recouped and the U.S. taxpayers be protected.

Healthcare settlements under the False Claims Act have rapidly increased as the Department of Justice has “ramped-up” its usage of the FCA to keep healthcare providers in-check.

The U.S. Attorney’s Office reorganized its health care fraud practice in 2010, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $1.36 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug and Cosmetic Act and other statutes.

Last year alone, the U.S. government, with the help of FCA whistleblowers, recovered over $4 billion from fraudulent government contractors.

The False Claims Act was passed by Congress during the American Civil War, where frauds on the Union government ran wild. Boot makers sold boots to the army that broke after weeks of use, and merchants fed soldiers rotten food. The essence of this fraud applies to False Claims in the modern-landscape.

Though fraud on the government may not be as easily identifiable as rotten food or ill-made boots, consulting an experienced False Claims Act attorney can help potential whistleblowers root-out violations of the Act by sifting through their employer’s questionable activities.