Diabetic Shoe Company Agrees to Pay $5.5 Million to Resolve False Claims Act Allegations Regarding “Custom” Shoe Inserts
Miami, Florida – Foot Care Store, Inc. d/b/a Dia-Foot (Dia-Foot), a diabetic shoe company based in Wellington, Florida, and its President and CEO Robert Gaynor, have agreed to pay $5,538,338 to settle allegations that the company sold custom diabetic shoe inserts that were not actually custom-fabricated in accordance with Medicare standards. The agreement is part of a civil settlement that resolves claims brought under the False Claims Act.
The United States alleged that between 2013 and 2018, Dia-Foot sold diabetic shoe inserts to customers nationwide, representing that many of those inserts were custom-made for an individual’s foot, when the inserts were actually made using generic foot models. The inserts were dispensed to diabetic patients who had a prescription from a health care provider and who believed they were getting a custom product. According to the government, despite fabricating the inserts using generic models, Dia-Foot billed Medicare and Medicaid for the custom version, or sold the inserts to other providers who then billed government health care programs for custom inserts. This allowed Dia-Foot to produce and sell more inserts and increase profits by cutting corners. The government also alleged that Dia-Foot advertised to customers that it was proud to be Medicare-compliant and had received Medicare approval for its custom diabetic shoe inserts, even though Dia-Foot received the Medicare approvals based on false information.
Individuals with diabetes can in some cases suffer from foot problems, including nerve damage, ulcers, and poor circulation. In severe cases, untreated problems can even lead to amputation. Foot orthotics such as custom shoe inserts are prescribed to help diabetic patients prevent such problems and are covered by Medicare and Medicaid.
In connection with the settlement, Dia-Foot and Robert Gaynor entered into a three-year Integrity Agreement (IA) with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). The IA requires, among other things, that Dia-Foot implement updated policies and procedures as part of its compliance program, and hire an Independent Review Organization to review quarterly Dia-Foot’s claims to Medicare and Medicaid.
The allegations were brought under the qui tam or whistleblower provisions of the False Claims Act by a former Dia-Foot employee. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. The whistleblower who brought the allegations in this case will receive a share of the settlement amount. The case is captioned U.S. ex rel. Newman v. Foot Care Store, Inc. d/b/a Dia-Foot, No. 9:18-CV-80702 (S.D. Fla.).
The resolution obtained in this matter was the result of a coordinated effort between the U.S. Attorney’s Office for the Southern District of Florida, with assistance from the HHS-OIG. Juan Antonio Gonzalez, United States Attorney for the Southern District of Florida, and Omar Pérez Aybar, Special Agent in Charge, HHS-OIG, announced the settlement.
The investigation and resolution of this matter illustrate the government’s emphasis on combatting health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477) or at http://tips.hhs.gov/.
The matter was handled by Assistant U.S. Attorney Clarissa Pinheiro Schild of the Southern District of Florida. The integrity agreement was negotiated by OIG Senior Counsel Tonya Keusseyan.
The claims resolved by the settlement are allegations only, and there has been no determination of liability.