June 22, 2018

Catch of the Week — Healogics

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to Healogics, Inc. On Wednesday, the Florida-based operator of hundreds of wound care centers agreed to pay up to $22.5 million to settle claims it violated the False Claims Act by billing Medicare for medically unnecessary and unreasonable hyperbaric oxygen therapy. See DOJ Press Release.

Hyperbaric therapy involves breathing oxygen inside a pressurized air chamber. While originally used to treat deep-sea divers with the bends, its use has been greatly expanded in recent decades to treat certain types of chronic wounds, especially those suffered by diabetics. There is some dispute within the medical community as to the benefits of the treatment. As reported in a Washington Post piece last year, the American Diabetes Association does not recommend hyperbaric therapy, finding “not enough supporting data on the efficacy of this treatment to recommend its use.”

Nevertheless, Medicare covers the treatment for numerous conditions where the skin fails to heal and conventional treatments do not work well. That is, of course, where the treatment is shown to be medically necessary and reasonable and otherwise complies with the Medicare regulations. As the Washington Post further reported, purveyors of this wound care treatment have not always satisfied these prerequisites for coverage and there has been significant overuse and overbilling in this area. So much so that Medicare has imposed stricter billing procedures in several states where Medicare payments for hyperbaric services have disproportionately exceeded the national average.

In this matter, the government alleged Healogics put patient profits over patient care by using the treatment when it was neither necessary or reasonable to do so. It is not the first time DOJ has gone after healthcare providers for alleged fraud associated with Hyperbaric therapy services. And the government made it very clear it would not be the last. In announcing the settlement, it stressed that “[w]hen greed is the primary factor in performing medically unnecessary health care procedures on Medicare beneficiaries, both patient well-being and taxpayer funds are compromised [and] [w]e will continue to thoroughly investigate health care companies that engage in such fraudulent schemes.”

The allegations originated in two whistleblower lawsuits filed under the qui tam provisions of the False Claims Act by four former Healogics employees. One of them was brought by James Wilcox, the former Director for Research and Quality for Medical Affairs. The other was brought by Dr. Benjamin Van Raalte, Dr. Michael Cascio, and John Murtaugh, two doctors and a former program director at Healogics-affiliated wound care centers. They will collectively receive a whistleblower award of up to $4.3 million from the proceeds of the government’s recovery.

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