WASHINGTON – The SCOOTER Store Inc. will pay the United States $4 million, and give up many millions more in pending claims for reimbursement to Medicare, to settle allegations that the company violated the civil False Claims Act and defrauded the United States, the Justice Department announced today.
In addition to the $4 million cash payment, the San Antonio wheelchair supplier will give up the right to reimbursement for most of its pending Medicare claims. Such claims total more than $43 million, but Medicare estimates that the payments The SCOOTER Store could actually expect to have received based on those claims is approximately $13 million. Medicare commonly reimburses less than the face value of claims presented to the agency for payment.
The cash component of the settlement package includes a $500,000 contribution by The SCOOTER Store founder Douglas Trent Harrison, who also agreed to forego dividends from his shares in the company for the next year in exchange for a release of his personal liability.
The settlement resolves a lawsuit brought by the United States in 2005, in which the government alleged that The SCOOTER Store engaged in a multi-media advertising campaign to entice beneficiaries to obtain power scooters paid for by Medicare, Medicaid, and other insurers. Instead of the “zippy” power scooters that were advertised, The SCOOTER Store sold the beneficiaries expensive power wheelchairs that they did not want, need, and/or could not use.
By representing to physicians that their patients wanted and needed power wheelchairs, The SCOOTER Store obtained thousands of “Certificates of Medical Necessity” from physicians who did not know about the company’s fraudulent practices. The SCOOTER Store then billed government and private health care insurers for power wheelchairs, which were far more costly than power scooters, and collected millions of Medicare and Medicaid dollars.
The SCOOTER Store received $5,000 to $7,000 in reimbursement for each power wheelchair it sold, more than twice the amount for a scooter, which sold for around $1,500 to $2,000. Many beneficiaries had no idea what kind of equipment they were getting, until it was delivered by The SCOOTER Store.
The government’s lawsuit also alleged that The SCOOTER Store knowingly sold used power mobility equipment to beneficiaries and billed Medicare as if the equipment were new, in violation of Medicare regulations. In addition, the U.S. alleged that The SCOOTER Store charged Medicare millions for unnecessary power mobility accessories.
“This settlement is part of our ongoing commitment to fighting abuse of Medicare’s durable medical equipment benefit,” said Assistant Attorney General Peter D. Keisler. “Equipment suppliers whose practices violate the law need to know that we are dedicated to protecting Medicare funds and beneficiaries from their fraudulent schemes.”
New rules for power mobility implemented last year by the Department of Health and Human Services Centers for Medicare and Medicaid Services are designed in part to prevent the abuses that resulted in the government’s lawsuit against The SCOOTER Store. In addition, The SCOOTER Store will operate for the next five years under a Corporate Integrity Agreement with the Office of the Inspector General at the Department of Health and Human Services that is designed to help ensure future compliance by the company with Medicare regulations.
The civil settlement resolves several lawsuits filed by The SCOOTER Store against the United States seeking payment for its claims to Medicare. As part of the settlement, The SCOOTER Store gave up those claims and agreed to dismiss the lawsuits.
The civil settlement also resolves claims in a suit brought by a whistleblower who was a former employee of The SCOOTER Store. As a result of the settlement, the whistleblower will receive $3,228,251 as the statutory award, and the whistleblowers’ suit also will be dismissed. Under the qui tam provisions of the False Claims Act, private parties can file an action on behalf of the United States and receive a portion of the settlement if the government reaches a monetary agreement with the defendants.
The case was investigated by the FBI’s San Antonio Health Care Fraud Unit, the Texas Attorney General’s Medicaid Fraud Control Unit, and the Office of the Inspector General, Department of Health and Human Services and was handled by the U.S. Attorney’s Office for the Western District of Texas and the Civil Division of the Department of Justice.