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Durable Medical Equipment Suppliers Settle False Claims Act

According to the Justice Department, Orbit Medical, Inc. and Rehab Medical, Inc. have agreed to settle allegations that Orbit violated the False Claims Act.  Orbit is a durable medical equipment supplier based in Salt Lake City, Utah. Rehab, a partial successor of Orbit, is headquartered in Indianapolis, Indiana.

According to the government, in 2010, two former employees of Orbit, Dustin Clyde and Tyler Jackson, filed a whistleblower complaint under the qui tam provisions of the False Claims Act.  The whistleblowers alleged that Orbit submitted false claims to government healthcare programs for power wheelchairs and accessories.

Government healthcare programs such as Medicare, the Federal Employees Health Benefits plan, and the Defense Health Agency will only pay for power wheelchairs for beneficiaries under limited circumstances, i.e. the individual cannot perform activities of daily living in their home wither other less costly mobile assistance equipment like a cane, walker or power scooter.  In addition, before the cost of a power wheelchair will be reimbursed by the government, the patient must be examined by a physician, receive a written prescription dated within 45 days of the examination, and provide documentation that evidences the patient’s medical need for the power wheelchair.  The government also requires very specific information on the prescription including the diagnoses that wheelchair is expected to accommodate, how long the patient will need the power wheelchair, and the physician’s signature.

In their qui tam complaint, the whistleblowers alleged that Orbit’s employees knowingly altered the paperwork for government healthcare beneficiaries in order to have the power wheelchair claims paid for by the government.  It was specifically alleged that Orbit employees were instructed to: 1) falsify prescriptions and supporting documentation to establish medical necessity, 2) forge physician’s signatures, and 3) alter documents to make it appear as though they came from a physician’s office.

The Justice Department says that Orbit and Rehab have agreed to settle the allegations for $7.5 million.  The whistleblowers will share in $1.5 million of the settlement proceeds as their reward under the qui tam provisions of the False Claims Act.  The government’s claims against Orbit’s former vice president and sales manager Jake Kilgore remain pending.  Kilgore was previously indicted by a federal grand jury in Utah for health care and wire fraud in 2013.