Department of Justice Seal


WEDNESDAY, APRIL 8, 1998 (202) 616-2765

TDD (202) 514-1888


WASHINGTON, D.C. -- A national franchisor of home oxygen equipment, three of its affiliates and two individuals will pay the United States $5 million to settle allegations they conspired to defraud Medicare by knowingly submitting false claims for home oxygen equipment to the federal health insurance program, the Department of Justice announced today.

Assistant Attorney General Frank W. Hunger of the Civil Division and Nora M. Manella, U.S. Attorney in Los Angeles, California, said the settlement resolves allegations against Home Americair of California; two of its franchises, Florida Homecair Inc. of Melbourne, Florida, and Bates East Corporation of King of Prussia, Pennsylvania; Thomas E. Frank, owner and president of Home Americair of California and its billing company, Home Americair Inc.; and Cynthia M. Bates, an owner of the Bates East franchise. Home Americair of California is based in Newport Beach, California.

The allegations originally were brought in two separate cases under the qui tam provisions of the False Claims Act by a former owner and employee of an Americair franchise in Louisville, Kentucky, and a former employee of an Americair franchise in King of Prussia, Pennsylvania. In intervening, the Department filed the cases in U.S. District Court in Los Angeles.

The lawsuits alleged that the companies, Frank and Bates defrauded Medicare through a complex scheme in which they provided home oxygen equipment to Medicare beneficiaries who were not qualified to receive coverage for such equipment. They then submitted false and misleading documentation, a patient's blood oxygen level, for example, in order to collect payments from Medicare.

"We will not allow taxpayers to absorb the costs of improper or false billings submitted to the government and will take action against companies that make such billings," Hunger said.

As part of the settlement, Home Americair of California, which operates more than 30 nationwide franchises of home oxygen equipment, will implement a corporate integrity program that will set forth specific procedures and safeguards to detect and prevent future billing problems.

Under the qui tam provisions of the False Claims Act, individuals who file suits on behalf of the government can receive from 15 to 25 percent of the total recovery if the United States intervenes and is successful in its prosecution. In this case, the relators in the Home Americair of California matter, Terry Frisco and Darrell Jones, will receive a total of $960,250, while the relator in the King of Prussia matter, Todd Penizotto, will receive $148,500.

The settlements were negotiated by the Civil Division and the U.S. Attorney's office in Los Angeles. They received assistance from the Department of Health and Human Services' Office of Inspector General in Orlando, Florida, Denver, Colorado, and Sacramento, California; the U.S. Attorney's office in Orlando; and the Health Care Financing Administration's Durable Medical Equipment Regional Carriers. Additional audit support was provided by Blue Cross Blue Shield of Florida.