Durable Medical Equipment Manufacturer Agrees To Pay $2.715 Million To Resolve False Claims Allegations
Innovative Therapies, Inc. (“ITI”) and its ultimate parent company Cardinal Health, Inc. (“Cardinal”) have agreed to pay $2.715 million to settle False Claims Act allegations, announced Jack Smith, Acting United States Attorney for the Middle District of Tennessee. The settlement concerns conduct initiated by ITI before being purchased by Cardinal in August 2014 and resolves a qui tam action filed by a whistleblower in May 2015.
“This Office remains committed to enforcement of the False Claims Act,” said Acting United States Attorney Jack Smith. “Fighting fraud and protecting the public fisc are priorities of the Department of Justice, and we will continue to work with our law enforcement partners to vigorously investigate alleged FCA violations. We recognize that through the acquisition of ITI, Cardinal inherited the issues that gave rise to the FCA conduct and ultimately took the necessary steps to resolve this case.”
The settlement resolves allegations that the companies caused the submission of false claims to Medicare through their marketing of certain negative pressure wound treatment (“NPWT”) devices as durable medical equipment (“DME”). Specifically, Relator’s complaint alleged that ITI marketed certain models of its Quantum line of NPWT devices – later renamed the PRO series following Cardinal’s acquisition of the ITI, as DME, despite knowing that these devices did not have the expected life of a durable device. These devices were pre-programmed with a specific number of therapy hours well below the expected life of a DME device, and were never used again once those hours expired. This marketing caused DME suppliers to bill for the devices as DME when they did not meet the standards for a durable device, resulting in the submission of false claims.
“This case is a good example of how the False Claims Act protects taxpayer dollars,” said Derrick L. Jackson, Special Agent in Charge at the U.S. Department of Health and Human Services, Office of Inspector General in Atlanta. “The money recovered will be transferred back to federal health care programs where it can be used to provide medical services for the elderly and disabled.”
The United States’ investigation began with a qui tam complaint filed by a former ITI employee. The qui tam provisions of the False Claims Act allow for whistleblowers, or relators, to file suit for violations of the act on behalf of the United States. A relator is entitled to a percentage of any amount recovered by the United States as a result of the information provided. Relator in this case will receive $488,700.
This matter was investigated by the Department of Justice, the United States Attorney’s Office for the Middle District of Tennessee, and the Department of Health and Human Services Office of Inspector General. The United States was represented by DOJ Trial Lawyer Michael Shaheen and Assistant U.S. Attorney Christopher C. Sabis.
The case is docketed as United States ex rel. Grogan v. Innovative Therapies, Inc., et al., No. 3:15-cv-0568 (M.D. Tenn.). The claims settled by this agreement are allegations only, and there has been no determination of liability.