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Durable medical equipment ("DME") fraud is one of the most common types of fraud relating to Medicare and Medicaid. The government loses tens of millions of dollars due to medical device fraud each year. Whistleblowers can draw attention to the medical device suppliers or physicians engaging in fraud and help the government recover lost funds.

What Is Medical Device Fraud?

Examples of medical devices include wheelchairs, blood glucose test strips, and prosthetic limbs. Medical device fraud can occur in a variety of forms, including but not limited to off-label marketing schemes, kickback arrangements, unnecessary billing, and defective devices.

Types of Medical Device Fraud

Off-Label Marketing

The U.S. Food and Drug Administration ("FDA") approves the use of medical devices for certain purposes and demographics to ensure the safety of patients using these products. However, some companies market their devices for off-label usage, which are not approved or supported by the federal government. Companies engage in these practices to increase sales, as it expands the population of individuals who can use the device.

In 2016, Biocompatibles Inc. paid $25 million to resolve FCA allegations relating to its misleading marketing of an embolic device called LC Bead. The FDA never approved LC Bead as a drug-delivery device, however, Biocompatibles allegedly promoted LC Beads a drug-delivery device for chemotherapy drugs. As a result of this alleged unapproved usage, false claims were submitted to government health programs.

Kickbacks or Illegal Payments

Kickbacks involve companies offering medical professionals illegal financial incentives in exchange for referring patients to their products. Financial incentives can come in many forms, including free vacations, lavish dinners, and bonus payments. The Anti-Kickback statute prohibits providing anything of value to induce the referral of products or services covered by government health programs.

In 2020, Merit Medical Systems Inc. ("MMSI") paid $18 million to resolve FCA allegations that it paid kickbacks to doctors to induce their use of MMSI EmboSphere and QuadraSphere devices among patients covered by government health programs. MMSI allegedly provided remuneration to healthcare providers in the form of marketing support, practice support, and even "educational" grants to reward past sales and incentivize future sales. Although MMSI claimed that this support was to increase awareness of these medical treatments, they only provided it to select medical providers.

Unnecessary Billing

Another form of DME fraud is billing the government for devices that patients do not need or never receive, which may involve falsifying the medical necessity determination written by the physician. In 2011, Hill-Rom Company paid $41.8 million to resolve allegations that it submitted claims to Medicare for medical equipment that was not medically necessary, including claims for patients who no longer used the equipment or patients who had died. In fact, Hill-Rom automatically billed Medicare for medical equipment without evaluating whether the patient still met Medicare's conditions for payment. The two relators jointly received over $8 million as their share of the settlement.

Defective Devices

In other instances, manufacturers knowingly provide and charge Medicare for defective devices. In 2018, Alere Inc. paid $33.2 million to resolve FCA allegations that it caused hospitals to submit false claims to Medicare by knowingly selling unreliable point- of-care diagnostic testing devices. Physicians rely on these diagnostic devices to determine a treatment plan, so when the devices are routinely inaccurate, patients are at risk.

Schedule a Consultation to Discuss DME Fraud Today

The whistleblower attorneys at Goldberg Kohn are dedicated to fighting all types of healthcare fraud, including DME fraud. We protect whistleblowers who stand up and speak out. If you suspect medical supply fraud, contact us today to schedule a free and confidential consultation.