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Justice News

Department of Justice
U.S. Attorney’s Office
Southern District of New York

FOR IMMEDIATE RELEASE
Monday, December 21, 2020

Acting Manhattan U.S. Attorney Announces $40.5 Million Settlement With Durable Medical Equipment Provider Apria Healthcare For Fraudulent Billing Practices

Apria Admits It Continued to Seek Reimbursement from Federal Programs When It Did Not Know If Patients Were Continuing to Use Their Non-Invasive Ventilator Rentals and After It Had Information Indicating That Patients Had Stopped Using Their Ventilators

Audrey Strauss, the Acting United States Attorney for the Southern District of New York, Scott Lampert, the Special Agent in Charge for the New York Office of the Inspector General of the U.S. Department of Health and Human Services (“HHS-OIG”), Patrick J. Hegarty, Special Agent in Charge of the Northeast Field Office of the U.S. Department of Defense - Office of Inspector General’s Defense Criminal Investigative Service (“DCIS”), and Norbert E. Vint, Deputy Inspector General Performing the Duties of the Inspector General, Office of Personnel Management Office of the Inspector General (“OPM OIG”), announced today a $40.5 million settlement of a fraud lawsuit against Apria Healthcare Group, Inc. and its affiliate, Apria Healthcare LLC (together, “Apria”), a large durable medical equipment (“DME”) provider with approximately 300 branch offices located throughout the United States.  The lawsuit alleges, among other claims, that Apria submitted false claims to federal health programs, including Medicare and Medicaid, seeking reimbursement for the rental of costly non-invasive ventilators (“NIVs”) to program beneficiaries who were not using the NIVs such that the devices were not medically necessary or that involved the improper waiver of patient co-insurance payments.  

Under the settlement, which was approved on December 18 by U.S. District Judge Edgardo Ramos, Apria agreed to pay a total sum of $40.5 million, with $37,632,789.89 being paid to the United States and the remaining amount to be paid to various states.  As part of the settlement, Apria also made extensive factual admissions regarding its conduct.

 Acting U.S. Attorney Audrey Strauss said: “It is critical to the financial integrity of federal health programs like Medicare and Medicaid that reimbursements are made only for medically necessary items and services.  DME providers like Apria have an obligation to ensure that the equipment and devices they rent to patients are medically necessary.  When companies knowingly disregard that obligation to maximize their profits, this Office will hold them accountable for their fraudulent conduct.” 

HHS-OIG Special Agent in Charge Scott J. Lampert said:  “Apria’s conduct compromised the integrity of the Medicare and Medicaid programs, and needlessly increased the financial burden on taxpayers.  Along with our law enforcement partners, HHS-OIG will continue to ensure that those individuals and entities that bill federal health care programs improperly are held accountable for their actions.”

DCIS Special Agent in Charge Patrick J. Hegarty said:  “The Defense Criminal Investigative Service (DCIS) is committed to protecting the integrity of TRICARE, the healthcare system for military members and their families.  Charging TRICARE for DME that was not necessary betrays the public’s trust.  This settlement demonstrates our partnership with HHS-OIG, OPM-OIG and the U.S. Attorney’s Office to investigate fraudulent schemes that impact TRICARE and put its beneficiaries at risk.”

OPM OIG Deputy Inspector General Norbert E. Vint said:  “The OPM OIG is committed to fighting all forms of health care fraud.  As demonstrated by this settlement, providers that exploit federal health care programs by submitting false claims will be held accountable.”

As alleged in the complaint filed by the United States, Apria decided in 2014 to prioritize the expansion of its NIV rental business because health care programs like Medicare paid as much as $1,400 per month to cover NIVs, a type of complex respiratory equipment that can dynamically adjust the pressure level of air delivery.  That expansion, however, came at the cost of Apria’s compliance with the basic medical necessity requirement of federal health programs.  Specifically, while Apria knew that it was responsible for monitoring patients’ utilization of their NIVs and to stop billing when NIVs were no longer being used, it did not have enough staff, or “respiratory therapists,” to conduct such monitoring.  As a result, Apria routinely billed Medicare and other programs when it did not know whether NIVs were still being used by patients and, therefore, remained medically necessary.  Further, even when Apria had information indicating that patients were no longer using their NIVs, it often continued to bill the federal health programs. 

As further alleged, Apria engaged in two other types of improper practices to obtain more NIV orders and higher profits.  First, Apria improperly billed federal health programs for certain NIV rentals that were being used in a setting called PAC mode to provide bi-level pressure support therapy, which was available from a less expensive device called VPAP RAD and did not qualify for reimbursement at the NIV rate.  Second, Apria improperly waived co-pays for a number of Medicare and TRICARE beneficiaries to induce them to rent NIVs.  For example, Apria employees offered to waive co-pays to convince patients to rent NIVs from Apria instead of competitors.  Further, Apria also waived co-pays without making the required individualized assessment of financial need.  As a result of those three widespread improper practices, Apria submitted thousands of false claims to federal health programs for NIV rentals and fraudulently received millions of dollars in reimbursements.

As part of the settlement, Apria admitted, acknowledged, and accepted responsibility for, among others, the following conduct:

NIV Continued Use Conduct

  • Apria relied on the respiratory therapists (“RTs”) in its branches to monitor patients’ usage of their NIV devices.  Further, Apria’s NIV promotional materials indicated that Apria’s RTs would regularly visit NIV patients to assess whether they used their NIV devices in accordance with their physicians’ instructions.
  • The RTs at Apria’s branches, however, often did not conduct regular visits to NIV patients to confirm that patients were using their NIVs as directed by their physicians. A January 2017 internal analysis, for example, found that in December 2016, Apria’s RTs failed to complete more than half of the visits to NIV patients mandated by Apria’s NIV clinical procedures at all three of Apria’s operational zones. 
  • Apria continued to seek payments from federal health programs for NIV rentals each month even though its RTs frequently failed to conduct in-home visits to verify that patients were still using their NIVs.  
  • In addition, when it had information from the RT visits indicating that patients had stopped using their NIVs, Apria often did not take steps to stop seeking payments from federal health programs or to determine if the NIV rentals were still medically necessary.

PAC Mode Conduct

  • In 2015, Apria encouraged its sales staff to actively urge physicians to order the Astral NIVs in PAC mode.  When they urged physicians to order the Astral NIVs in PAC mode, Apria’s salespeople frequently did not tell the physicians that PAC mode therapy was also available through the VPAP RAD at a lower monthly cost.
  • On a number of occasions, this resulted in Apria renting the more expensive Astral NIVs to patients with the PAC mode therapy orders, including patients covered by federal health programs, even though the less expensive VPAP RADs may have met those patients’ medical needs.

Co-Pay Waiver Conduct

  • Managers at a number of Apria’s branches directed salespeople at those branches to routinely discuss the availability of co-pay waivers with NIV patients, including before the patients raised concerns about their ability to make these payments.  In a number of cases, those managers also authorized salespeople to offer co-pay waivers to persuade patients to rent NIVs from Apria instead of other DME suppliers.
  • During the Covered Period, Apria gave full co-pay waivers to hundreds of NIV patients without making an assessment as to whether those patients could have afforded some portion of their co-pay responsibilities.

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  • As a result of the admitted conduct, Apria received reimbursements from the federal health programs for some NIV rental claims that did not comply with all of those programs’ billing rules and guidance.

In connection with this settlement, Apria also entered into a Corporate Integrity Agreement with HHS-OIG, which requires Apria to implement board oversight, a claims review process by an Independent Review Organization, and other compliance steps designed to foster adherence to federal health care program requirements and thereby protect the programs.

This settlement arises from a whistleblower case filed by three former Apria employees under the qui tam provisions of the False Claims Act, which allow private persons – known as “relators” – to file civil cases on behalf of the United States and share in the recovery. 

Acting U.S. Attorney Strauss thanked the Washington State Medicaid Fraud Control Unit for its extensive collaboration in the investigation and resolution of this case, and also praised the outstanding investigative work of the HHS-OIG, DCIS, and OPM-OIG.

This case is being handled by the Office’s Civil Frauds Unit.  Assistant U.S. Attorneys Li Yu and Steven Kochevar and former Assistant U.S. Attorney Casey Lee have handled the case.

Topic(s): 
Health Care Fraud
Contact: 
James Margolin, Nicholas Biase (212) 637-2600
Press Release Number: 
20-297
Updated December 21, 2020