Tuesday, May 9, 2017

California Oxygen Equipment Provider Pays $11.4 Million To Resolve Allegations of False Claims and Cross-Referral Kickbacks With Sleep Clinics

On April 25, 2017, Braden Partners, L.P., doing business as Pacific Pulmonary Services,  a DME based in California, has agreed to pay $11.4 million to resolve allegations against it and its general partner, Teijin Pharma USA LLC, to resolve a False Claims Act (qui tam) lawsuit filed in federal court in San Francisco.  

The lawsuit resolved by the settlement contains allegations only and there has been no admisison of liability. 

Pacific Pulmonary Services is a DME home medical business and provides stationary and portable oxygen tanks and related supplies, and sleep therapy equipment, such as Continuous Positive Airway Pressure, Bilevel Positive Airway Pressure masks and related supplies, to patients’ homes in California and other states.  

The qui tam lawsuit was originally filed by Manuel Alcaine, a former sales representative of Pacific Pulmonary Services. The government intervened and took over the action, as it did in this case.  In this case, Mr. Alcaine will receive a hefty $1,824,000 of the settlement funds. This is why compliance plans are needed since former employees can file a lawsuit any alleged wrongdoing and profit from it instead of having to report it to the company before they quit or are terminated.  

The qui tam lawsuit joined by the government accused Pacific Pulmonary of submitting claims for reimbursement to Medicare and other federal healthcare programs in violation of program rules and as part of a cross-referral kickback scheme with sleep clinics.  

The lawsuit also alleges that, beginning in about 2004, Pacific Pulmonary Services began submitting claims to the Medicare, TRICARE and Federal Employee Health Benefits programs for home oxygen and oxygen equipment without obtaining a physician authorization, as required by program rules.  

Further, it is alleged that beginning in 2006, some of the company’s patient care coordinators agreed to make patient referrals to sleep testing clinics in exchange for those clinics’ agreement to refer patients to Pacific Pulmonary Services for sleep therapy equipment. 

There was a criminal investigation component of this case after the former employee filed the sealed lawsuit. The FBI in 2012 issued search warrants on several of the business locations. At that time, the FBI Healthcare Fraud Unit was looking into a number of companies in the home medical equipment business. This settlement will help resolve and close out that investigation as well which means that the case was deemed civil and not criminal in the end analysis by the government. 

While it is a large monetary settlement it will help resolve a case that is expensive and risky to go to trial. Losing a qui tam civil case can result in exclusion by OIG and most of these cases settle since not only is the federal government the plaintiff but is also the one that controls their Medicare provider number. 

Posted by Tracy Green, Esq.
Green and Associates, Attorneys at Law
Email: tgreen@greenassoc.com
Work: 213-233-2260



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