Largest-Ever Health Care Fraud Settlement For Eastern Washington

Sarasota, FL (WorkersCompensation.com) – Earlier this month, the U.S. Attorney’s office for the Eastern District of Washington announced a settlement in what they are calling, “the largest-ever health care fraud settlement in eastern Washington”.

Under Medicare, durable medical equipment companies that supply oxygen equipment can bill for leasing the equipment for 36 months. After 36 months, also known as the oxygen rental cap, companies are required to lease the equipment to the patient for the remainder of the equipment’s useful life, which is defined at 5 years. 

While the company can bill for maintenance and service of the equipment after the 36 months, the companies are not allowed to collect copays associated with the equipment rental from the patient for the remaining 2 year time period. Additionally, any lease payments after the 36 months are not eligible for reimbursement from Medicare. After a period of 60 months, with the patient’s approval, companies are allowed to replace the equipment and resume the 36-month lease payments. 

Lincare Holdings, which is a Delaware company with headquarters located in Clearwater, Florida, is a durable medical equipment company that supplies oxygen equipment, including oxygen concentrators, for patients with respiratory conditions that require oxygen therapy. Lincare provided respiratory therapy equipment for patients across the U.S., with a billing and collections center located in Spokane Valley, Washington that managed their claims and billing.

According to the details in the Settlement Agreement, Lincare had basic audits in place for the cap requirement that identified non-recouped overpayments that were due. However, when those overpayments were not identified, and an employee from their Montana offices raised concern of payments being made over the 36 month cap that were not refunded, the employee was allegedly informed by individuals in the business offices that it was the company’s policy to keep billing until the claims were denied for meeting the cap. 

As a result of the qui tam Complaint that was filed in 2021, Lincare has agreed to pay out $29 million and implement extensive changes to resolve allegations of fraudulently billing Medicare and Medicare Advantage plans. One of the changes includes designing and implementing a software program that tracks the number of payments on a piece of equipment, and then stops billing once payments for 36 months has been reached. Additionally, the company has agreed to reimburse patients within the next 12 months for any copays that were made in error. Lincare has entered into a five-year corporate integrity agreement as a result of the settlement. 

Steven J. Ryan, Special Agent in Charge at the Department of Health and Human Services, Office of Inspector General (HHS-OIG), believes the changes are a step in the right direction. “We are hopeful that with the implementation of a Corporate Integrity Agreement, Lincare will invest in controls to ensure that all plans are billed appropriately. HHS-OIG is committed to protecting federal health care programs from fraudulent and wasteful practices at the hands of providers.”

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