Thursday, December 24, 2015

Splint Supplier and Its President to Pay Over $10 Million to Resolve False Claims Act Allegations for Splints Provided to Patients in Skilled Nursing Facilities

Maryland-based splint supplier Dynasplint Systems Inc., and its founder and president, George Hepburn, agreed on December 18, 2015 to pay approximately $10.3 million to resolve allegations that they violated the False Claims Act by improperly billing Medicare for splints provided to patients in skilled nursing facilities (SNFs). The settlement includes the monies withheld by an earlier payment suspension.

Patients staying in skilled nursing facilities, or their insurers such as Medicare, pay a bundled payment to these facilities that cover all of a patient’s needs, including such items as splints, and thus no separate Medicare reimbursement for such devices is permitted.   

To circumvent Medicare rules, defendants allegedly mispresented that patients were in their homes or other places that were not skilled nursing facilities. Thus, the government alleged that Hepburn and Dynasplint knowingly mischarged Medicare for splints used by patients in Medicare-certified SNFs. 

The settlement resolves allegations originally brought in a lawsuit filed by Meredith Deane, a former sales executive for Dynasplint, under the whistleblower, or qui tam, provisions of the False Claims Act, which allow private parties to bring suit on behalf of the government and to share in any recovery.  

The United States may intervene in such an action as it did here.  Ms. Deane and her counsel will receive at least $1.98 million for the settlement.

In August 2013, the U.S. Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) suspended payments to Dynasplint based upon the allegations in the lawsuit which it found to contain credible allegations of fraud in the claims and billing.  As part of the settlement, defendants are agreeing to forfeit all funds held by this payment suspension, approximately $8.5 million. 

The lawsuit is captioned U.S. ex rel. Deane v. Dynasplint Health Systems, Inc. and George Hepburn, Case No. 10-cv-2085 (E.D. La.).  The claims resolved by this settlement are allegations only and there has been no determination of liability. 

Attorney Commentary: It is always easy after the fact to see how an arrangement like this will be a problem after the fact. This is a situation where it seems the SNF knew or should have known or encouraged this type of billing arrangement in order for them to save on their own costs. The splints were provided but then the indication on the claim is that the patient is located somewhere other than the SNF even though Medicare should be able to tell the patient is in a SNF. What an expensive business model.

We tell clients that billings do not matter when you can be subject to repayment years later. If the business model does not work under the rules and regulations, it is not worth having to pay back the entire amount years later, be subject to lawsuits or to even criminal allegations of Medicare fraud. Think big picture and if there are compliance issues, fix them now.

Posted by Tracy Green, Esq.
Office: 213-233-2261


DISCLAIMER: Green & Associates' articles and blog postings are prepared as a service to the public and are not intended to grant rights or impose obligations. Nothing in this website should be construed as legal advice. Green & Associates' articles and blog postings may contain references or links to statutes, regulations, or other policy materials. The information provided is only intended to be a general summary. It is not intended to take the place of either the written law or regulations. We encourage readers to review the specific statutes, regulations, and other interpretive materials for a full and accurate statement of their contents and contact their attorney for legal advice. The primary purpose of this website is not the commercial advertisement or promotion of a commercial product or service and this website is not an advertisement or solicitation. Anyone viewing this web site in a state where the web site fails to comply with all laws and ethical rules of that state, should disregard this web site.

The information provided on this website is for informational purposes only. It is not intended to create, and does not create, a lawyer-client relationship with Green & Associates, Attorneys at Law. Sending an e-mail to Tracy Green does not contractually obligate them to represent you as your lawyer, or create any type of client relationship. No attorney-client relationship will be formed absent a written engagement or retainer letter agreement signed by both Green & Associates and client and which specifies the scope of the engagement.

Please note that e-mail transmission is not secure unless it is encrypted. E-mail messages sent to Ms. Green should not include confidential or sensitive information.