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Monday
Jun012015

Two whistleblowers split $1.5 million in wheelchair false claims settlement

Orbit Medical Inc. and Rehab Medical Inc. will pay $7.5 million to resolve allegations that Orbit submitted false claims to federal health care programs for power wheelchairs and accessories.

The allegations resolved by the settlement with Orbit and Rehab were filed under the False Claims Act by two former Orbit employees, Dustin Clyde and Tyler Jackson.

Clyde and Jackson will receive a total of about $1.5 million, the Justice Department said.

Under the False Claims Act, a private party can sue for false claims on behalf of the government and share in any recovery. 

Orbit Medical is based in Salt Lake City, Utah and Rehab Medical in Indianapolis, Indiana. Rehab Medical is a partial successor of Orbit.

Medicare pays for power wheelchairs for beneficiaries living at home who aren't able to use a cane, walker, or power scooter. To qualify for reimbursement, a doctor must conduct a face-to-face examination of the beneficiary and provide the supplier with a written prescription.

The prescription signed by the doctor must include the beneficiary’s name, the exam date, diagnoses, why the wheelchair is needed, and for how long.

The DOJ said:

The settlement with Orbit Medical and Rehab Medical resolves allegations that Orbit sales representatives knowingly altered physician prescriptions and supporting documentation to get Orbit’s power wheelchair and accessory claims paid by Medicare, the Federal Employees Health Benefits Plan, and the Defense Health Agency. 

The settlement didn't determine liability, the DOJ said.

The whistleblowers’ suit also named as a defendant Jake Kilgore, the co-owner and a former vice president and sales manager at Orbit Medical.

The United States intervened in that part of the whistleblower suit in April 2014. The DOJ's settlement with Orbit and Rehab Medical didn't resolve the pending False Claims Act allegations against Kilgore. 

In a separate criminal action in late 2013, a federal grand jury in Utah indicted Kilgore, 36, on three counts of health care fraud, three counts of false statements related to health care, and three counts of wire fraud.

Three former Orbit sales representatives have pleaded guilty in the criminal case. Morgan Workman, 37, of Farmington, Utah, David Evans, 31, of South Jordan, Utah, and Hunter Hartman, 31, of Ladera Ranch, California, admitted to a conspiracy to commit health care fraud. They're waiting to be sentenced.

Orbit billed Medicare $20 million from October 2006 to June 2011 for power wheelchairs, collecting $15 million in payments, the DOJ said.

The False Claims Act lawsuit was United States ex rel. Clyde et al. v. Orbit Medical et al., No. 2:10-CV-00297 (D. Utah).

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Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.