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Press Release

Southeastern Physical Therapy And Owner To Pay $152,000 To Settle False Claims Allegations For Submitting Claims For Medically Unnecessary Durable Medical Equipment To Veterans Administration

For Immediate Release
U.S. Attorney's Office, Western District of North Carolina

ASHEVILLE, N.C. – U.S. Attorney Andrew Murray announced today that Asheville-based Southeastern Physical Therapy (SEPT) and owner Darren Cady have agreed to resolve allegations that Cady received illegal kickbacks and violated the False Claims Act by submitting claims for reimbursement for certain durable medical equipment to the Veterans Affairs (VA) while participating in the VA “Choice Provider” program.

The Veterans Access, Choice, and Accountability Act of 2014 provided veterans with expanded access to third-party providers outside the VA system.  In 2018, the program was replaced by the VA Maintaining Internal Systems and Strengthening Integrated Outside Networks Act of 2018 (“Mission Act”).  The Mission Act provided for the same access to third-party providers.  Under the 2014 Act and the Mission Act, veterans could use third-party providers like SEPT for certain services.  Provider participation in the program was memorialized in contracts with third-party administrators.  The contracts required providers to comply with applicable local, State, and federal laws, rules, regulations and institutional and professional standards of care.

The United States alleges that, among other things, SEPT and Cady made materially false, fictitious, and fraudulent statements and representations, or material omissions, regarding the medical necessity of a medical device and received illegal kickbacks from the device manufacturer for prescribing the devices to VA patients.  The United States alleges that Cady entered into a contract with the device manufacturer, which paid Cady for prescribing the devices.  The United States also alleges that Cady gave a copy of his signature to a medical device salesperson, who used Cady’s signature to complete at least some medical necessity forms for VA patients, which forms accompanied invoices to the United States for payment for the devices.  The United States alleges that Cady did not examine or personally treat the VA patients for whom he prescribed the devices, and further alleges that the patients were not instructed on how to safely or effectively use the product.

“Prescribing devices to VA patients that are not medically necessary is dangerous and wastes important resources intended to help our nation’s veterans,” said U.S. Attorney Murray.  “My office will vigorously pursue providers and other actors that seek to take advantage of VA benefits through the submission of false claims that promote fraud and abuse in these critical government programs.”

This settlement resolves allegations investigated by the government under the False Claims Act.  The settlement is a result of the coordinated effort between the VA Office of Inspector General and the U.S. Attorney’s Office for the Western District of North Carolina.

The claims resolved in this settlement are allegations only and there has been no determination of liability against SEPT, Cady, or any other entity.


Updated February 10, 2021

False Claims Act