Medical Devices and DME

January 29, 2016

Amalya Cherniavsky and her husband Vladislav Tcherniavsky, the former owner and former operator of California-based durable medical equipment supply company JC Medical Supply were sentenced  for their roles in a $1.5 million Medicare fraud scheme.  They were ordered to pay $614,418 in restitution and Tcherniavsky was ordered to serve 51 months in prison.  The evidence at trial demonstrated that they paid illegal kickbacks to patient recruiters in exchange for patient referrals and paid kickbacks to physicians for fraudulent prescriptions—primarily for expensive, medically unnecessary power wheelchairs—which the defendants then used to support fraudulent bills to Medicare.  DOJ

January 12, 2016

Connecticut-based J&L Medical Services agreed to pay $600,000 to resolve allegations it violated the federal and state False Claims Acts.  J&L Medical is a durable medical equipment company that provides Continuous Positive Airway Pressure (CPAP) and Bilevel Positive Airway Pressure (BiPAP) devices and accessories to Medicare and Medicaid beneficiaries who have been diagnosed with obstructive sleep apnea.  According to the government, the company regularly used the services of unlicensed technicians to provide respiratory therapy services to Medicare and Medicaid beneficiaries, including setting up CPAP and BiPAP machines, fitting the patients with the masks used with those machines, and educating the patients about the use of the machines.  The allegations originated in a whistleblower lawsuit filed by John Hart, a former employee of J&L Medical and a licensed respiratory therapist, under the qui tam provisions of the False Claims Act.  He will receive a whistleblower award of $102,000 from the proceeds of the government’s recovery.  DOJ (CT)

December 22, 2015

Coloplast Corp., a manufacturer of ostomy and continence care products, and Liberator Medical Supply, Inc., a medical products supplier, agreed to pay $3,160,000 and $500,000, respectively, to resolve allegations that Coloplast paid unlawful kickbacks to several medical suppliers, including Liberator, to induce them to conduct promotional campaigns designed to refer individual users to Coloplast products.  In addition to Liberator, the government alleged Coloplast also paid kickbacks to Byram Healthcare Centers, Inc.; CCS Medical, Inc.; Liberty Medical, Inc.; and Handi Medical, Inc. in return for marketing promotions and conversion campaigns.  The government alleged that in the case of Byram, Liberty, and Handi, Coloplast’s promotional campaigns allegedly included kickbacks in the form of funding for cash incentives – sometimes known as “spiffs” – paid to the suppliers’ sales personnel to induce them to refer patients to Coloplast products.  In other instances, Coloplast allegedly gave rebates or price concessions as inducements for the promotional campaigns.  The allegations first arose in a whistleblower lawsuit filed by two former employees and one current employee of Coloplast under the qui tam provisions of the False Claims Act.  They will receive a yet-to-be-determined whistleblower award from the proceeds of the government’s recovery. DOJ (DMA)

December 18, 2015

Maryland-based splint supplier Dynasplint Systems Inc., and its founder and president, George Hepburn, agreed to pay roughly $10.3 million to resolve allegations they violated the False Claims Act by improperly billing Medicare for splints provided to patients in skilled nursing facilities.  According to the government, to circumvent Medicare rules which provide for bundled payment to these facilities that cover all of a patient’s needs, Hepburn and Dynasplint mispresented that patients were in their homes or other places that were not skilled nursing facilities.  The allegations first arose in a whistleblower lawsuit filed by former Dynasplint sales executive Meredith Deane under the qui tam provisions of the False Claims Act.  Ms. Deane will receive a whistleblower award of roughly $2 million from the proceeds of the government’s recovery.  DOJ

November 20, 2015

Huey P. Williams Jr., owner of Houston-area based durable medical equipment companies Hermann Medical Supplies Inc. and Hermann Medical Supplies II was sentenced to 63 months in prison and to pay $1.96 million in restitution for his role in a $3.4 million Medicare fraud scheme.  Specifically, Williams caused Hermann Medical to bill Medicare for components of an “arthritis kit,” which included expensive, rigid braces and orthotics with adjustable joints that required fitting and adjustment, when in reality, Williams purchased and provided to beneficiaries only inexpensive, flimsy neoprene braces and equipment, to the extent he provided any equipment at all.  DOJ

November 6, 2015

Valery Bogomolny, owner of Royal Medical Supply, was convicted for his role in a $4 million Medicare fraud scheme.  According to evidence presented at trial, Bogomolny used his company to bill Medicare for power wheelchairs, back braces and knee braces that were medically unnecessary, not provided to beneficiaries or both.  The evidence further showed Bogomolny created false documentation to support his false billing claims, including creating fake reports of home assessments that never occurred.  DOJ

October 30, 2015

The Department of Justice reached 70 settlements involving 457 hospitals in 43 states for more than $250 million related to cardiac devices implanted in Medicare patients in violation of Medicare coverage requirements.  The devices, called implantable cardioverter defibrillators (ICDs), are electronic devices implanted near and connected to the heart to detect and treat chaotic, extremely fast, life-threatening heart rhythms, called fibrillations, by delivering a shock to the heart, restoring the heart’s normal rhythm.  Only patients with certain clinical characteristics and risk factors qualify for an ICD covered by Medicare.  According to the government, from 2003 to 2010 each of the settling hospitals implanted ICDs during periods prohibited by the Medicare’s National Coverage Determination.  Most of the settlements originated from allegations first raised in a whistleblower lawsuit brought under the qui tam provisions of the False Claims Act by Leatrice Ford Richards, a cardiac nurse, and Thomas Schuhmann, a health care reimbursement consultant.  They have so far received a combined whistleblower award of more than $38 million from the settlements.  The Department of Justice is continuing to investigate additional hospitals and health systems.  DOJ

October 16, 2015

A federal jury in Los Angeles convicted Amalya Cherniavsky and her husband, Vladislav Tcherniavsky, for conspiracy to commit health care fraud in connection with a $1.5 million Medicare fraud scheme.  The evidence at trial demonstrated that Cherniavsky owned JC Medical Supply, a purported durable medical equipment supply company, and that she co-operated the company with her husband, Tcherniavsky, and that they paid illegal kickbacks to patient recruiters in exchange for patient referrals.  The evidence further showed that the defendants paid kickbacks to physicians for fraudulent prescriptions – primarily for expensive, medically unnecessary power wheelchairs – which the defendants then used to support fraudulent bills to Medicare.  DOJ

July 30, 2015

California-based medical device manufacturer NuVasive Inc. agreed to pay $13.5 million to resolve charges it violated the False Claims Act by improperly promoting the company’s CoRoent System for spine surgeries for uses not approved by the Food and Drug Administration.  The settlement also resolves allegations NuVasive paid illegal kickbacks to induce physicians to use the company’s CoRoent System.  The government’s allegations originated in a whistleblower lawsuit filed by former NuVasive sales representative Kevin Ryan under the qui tam provisions of the False Claims Act.  He will receive a whistleblower reward of approximately $2.2 million.  Whistleblower Insider