Medical Device Distributor to Pay $1,019,000 to Resolve False Claims Act Liability Arising from Billing of “P-Stim” Devices

PHILADELPHIA – United States Attorney Jacqueline C. Romero announced that a medical device distributor, Azon Medical, LLC (“Azon”), has agreed to pay $1,019,307.86 to resolve liability under the False Claims Act for allegedly causing improper billing of “P-Stim” devices, in this case branded as “AnSiStim.”

From approximately September 1, 2016, through October 26, 2016, Azon marketed and sold AnSiStim devices as reimbursable by Medicare under a code used for implantable neurostimulator devices, which are surgically implanted into the central nervous system or targeted peripheral nerves through procedures that are typically performed by a surgeon in an operating room. Azon’s customers applied AnSiStim devices using only an adhesive and a limited amount of needles, without any surgery or anesthesia, and without the assistance of a surgeon or an operating room.

AnSiStim is an electro-acupuncture device that, pursuant to manufacturer’s instructions, is affixed behind a patient’s ear using an adhesive. Needles are inserted into the patient’s ear and affixed using another adhesive. Once activated, the AnSiStim device then provides intermittent stimulation by electrical pulses. It is a single-use, battery-powered device designed to be worn for several days until its battery runs out, at which time the device is thrown away. Medicare does not reimburse for acupuncture or acupuncture devices like AnSiStim or other brand names of this device, including Stivax, NeuroStim, E-Pulse, and NSS-2 Bridge.

“Medicare paid Azon’s customers hundreds of thousands of dollars for improperly billed acupuncture devices,” said U.S. Attorney Romero. “Azon, through coverage advisories from Medical Contractors and communications from medical providers, was on notice that it was promoting and selling AnSiStim devices using false reimbursement advice. We will continue working with our partners to hold accountable distributors or marketers who carry out false billing schemes like this one.”

“Marketers and distributors need to provide accurate and truthful information regarding their devices’ eligibility for Medicare reimbursement,” said Special Agent in Charge Maureen Dixon for the Department of Health and Human Services, Office of Inspector General (“HHS-OIG”). “HHS-OIG and the U.S. Attorney’s Office will continue to work together to ensure the integrity of the Medicare program by persistently following up on allegations of improper billings.”

This case was investigated by HHS-OIG. It was handled by Assistant U.S. Attorney Mansi G. Shah and former Assistant U.S. Attorney Matthew E.K. Howatt.

The settled civil claims are allegations only. There has been no determination of civil liability.