Medical Equipment Company And Two Executives Pay More Than $12 Million To Resolve False Claims Act Allegations

NEWARK, N.J. – U.S. Healthcare Supply LLC and two executives have agreed to pay the United States more than $12.2 million to resolve allegations that they violated the federal False Claims Act by using a fictitious entity to make unsolicited telephone calls to Medicare beneficiaries in order to sell them durable medical equipment. 

U.S. Attorney Paul J. Fishman of the District of New Jersey and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division announced the settlement today.

U.S. Healthcare Supply, based in Milford, New Jersey, has agreed to pay $5 million plus interest and Jon P. Letko, its owner and president, has agreed to pay $1 million plus interest. His brother, Edward J. Letko, the owner and president of Oxford Diabetic Supply Inc., a medical equipment supplier that allegedly also participated in the scheme, has agreed to pay $6 million plus interest. 

“Cold-calling people to sell them expensive medical equipment is prohibited for a reason: unsuspecting patients shouldn’t be coerced into making medical decisions about devices and equipment – which they may not even need – on the basis of a sales pitch,” U.S. Attorney Fishman said.

The settlement announced today resolves allegations that U.S. Healthcare Supply and Oxford Diabetic Supply set up and controlled an entity called Diabetic Experts Inc., which they used to make unsolicited telephone calls to suspected Medicare beneficiaries in order to sell them durable medical equipment. The companies submitted claims to Medicare for the equipment that they sold based on these unsolicited calls, in violation of the Medicare Anti-Solicitation statute. 

“We will continue to hold health care providers accountable for attempting to circumvent Medicare statutes and regulations that help prevent the submission of claims for medically unnecessary services and supplies,” Principal Deputy Assistant Attorney General Benjamin C. Mizer, head of the Justice Department’s Civil Division, said. “Arrangements which clearly disregard program requirements in order to enhance the financial interests of health care providers will not be tolerated.”

U.S. Attorney Fishman and Principal Deputy Assistant Attorney General Mizer credited special agents of the U.S. Department of Health and Human Services – Office of the Inspector General, under the direction of Special Agent in Charge Scott J. Lampert, with the investigation leading to today’s settlement.

The government is represented by Assistant U.S. Attorney Charles Graybow of the U.S. Attorney’s Office Health Care and Government Fraud Unit in Newark and Trial Attorney John Henebery of the Justice Department’s Civil Division. 

U.S. Attorney Paul J. Fishman reorganized the health care fraud practice at the New Jersey U.S. Attorney’s Office shortly after taking office, including creating a stand-alone Health Care and Government Fraud Unit to handle both criminal and civil investigations and prosecutions of health care fraud offenses. Since 2010, the office has recovered more than $1.31 billion in health care fraud and government fraud settlements, judgments, fines, restitution and forfeiture under the False Claims Act, the Food, Drug, and Cosmetic Act and other statutes.       

The claims settled by this agreement are allegations only and there has been no determination of liability.

Defense counsel: Joseph F. Savage Jr. Esq., Boston, and Jura C. Zibas Esq., New York