LifeWatch Services: The 2012 Settlement Over False Codes and Free Staff

In the LifeWatch 2012 settlement, LifeWatch Services agreed to pay $18.5 million to resolve allegations of false cardiac monitoring claims to federal health care programs, including false Medicare diagnostic codes and free staff supplied to hospitals and medical practices to induce referrals. Two former sales representatives brought the cases. Their allegations reached both sides of the business: how LifeWatch made a monitoring claim payable and what it offered the institutions sending patients its way.

LifeWatch Services, based in Rosemont, Illinois, supplied ambulatory cardiac telemetry. The Department of Justice announced the settlement on March 23, 2012, resolving two lawsuits under the False Claims Act. The complaints described a more expensive service billed for patients whose reported symptoms did not qualify them for it, alongside a referral arrangement that supplied something a hospital or practice could put straight to work: full-time employees.

Why the Cardiac Monitoring Code Mattered

According to the complaints, LifeWatch knew that ambulatory cardiac telemetry services were not eligible for Medicare reimbursement for patients who had experienced only mild or moderate palpitations. The whistleblowers alleged that LifeWatch nevertheless submitted claims for those patients using a false diagnostic code to get paid.

Ambulatory cardiac telemetry used cell-phone technology to record cardiac events in real time without the patient having to act. Traditional event monitoring required the patient to notice an event and press a button to record the heart rhythm. That difference in how the service worked came with a substantial difference in payment.

During the period covered by the allegations, Medicare reimbursed ambulatory cardiac telemetry services at between $750 and $1,200, compared with roughly $250 for traditional event monitoring.

The alleged substitution was in the reason for the test. A patient’s mild or moderate palpitations did not become more serious because a different code appeared on a claim. The code allegedly made the higher-paid service look eligible for reimbursement. Taxpayers were asked to fund monitoring that the patients’ reported symptoms did not qualify for.

Free Staff at the Source of the Referrals

The second allegation concerned free labor. The complaints alleged that LifeWatch supplied full-time employees to several hospitals and medical practices without charge, improperly inducing Medicare claims for monitoring services. The whistleblowers described those services as kickbacks.

In the LifeWatch allegations, the benefit arrived as people working at a hospital or practice, while the resulting monitoring business could generate claims paid by Medicare. That connects a staffing decision on one side of the transaction to a federal payment on the other.

The 2024 Rutgers University Law Review paper Plausible Cause: Connecting the FCA and AKS in the Context of Health Care Fraud explains that a health care kickback can take the form of a benefit supplied in kind as well as cash. That distinction makes LifeWatch’s alleged arrangement easier to recognize. The valuable thing offered was staff time.

A review confined to the diagnosis on a claim would miss that part of the story. We examine who supplied the staff, who received their work and how the arrangement connected to monitoring referrals. The alleged coding problem concerned whether the patient’s condition supported payment. The alleged staffing problem concerned what the referral source received for sending the business.

Two Sales Representatives, Two Whistleblower Cases

Two former LifeWatch sales representatives filed separate qui tam cases. The settlement resolved both.

Their role matters because this case reached beyond the claim-submission desk. Sales activity and relationships with hospitals and practices were part of the alleged conduct. Someone who knows what customers were offered can connect a commercial arrangement to claims that, viewed alone, say little about how the business was obtained.

The Justice Department announced that the two whistleblowers together would receive approximately $3.4 million as their share of the settlement proceeds.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

What LifeWatch Had to Monitor Afterward

LifeWatch also entered a five-year Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services. The Justice Department’s announcement described oversight of claim submission, sales-force activities and certain business-referral relationships. The chief executive and other corporate executives had to personally certify compliance.

Those subjects followed the business from the sales relationship to the submitted claim. A billing review could examine the diagnosis used to obtain payment. A review of sales and referral relationships could examine the benefits offered to the institutions supplying patients. Executive certification put responsibility for compliance above the people entering codes or servicing accounts.

A later action shows the agreement at work. In its March 23, 2015 account of a separate LifeWatch resolution, HHS-OIG said LifeWatch disclosed conduct under the agreement and agreed to pay $737,000 to resolve allegations about ambulatory cardiac telemetry claims. The agency alleged that the medical records did not support a physician order for the telemetry services billed.

The later allegation concerned the order itself. Alongside the earlier diagnostic-code allegations, it makes the operational question concrete: what service did the clinical documentation support, and what service reached Medicare as a claim?

The Pattern Across Cardiac Monitoring Cases

Later cardiac monitoring cases returned to the same business decisions: the diagnosis that justified the service, the financial benefit offered to the referral source and the service selected for payment.

CardioNet’s 2015 coding settlement concerned a similar allegation: inaccurate diagnostic codes made mild or moderate palpitations appear to justify more expensive monitoring.

In MedNet’s 2016 settlement, the Justice Department alleged a different referral benefit: customers billed Medicare for MedNet’s discounted monitoring work and kept the difference.

LifeWatch’s later enrollment-portal case, resolved in 2023, concerned choices that allegedly selected telemetry when physicians intended a less expensive service.

Each account identifies a decision someone inside the business could recognize. A diagnosis can change the apparent medical need. A staffing offer or billing arrangement can influence where referrals go. An enrollment choice can change the service selected. The value of an insider’s account is knowing how one of those decisions became a paid claim.

You Know How Free Staff Won Monitoring Referrals

If you know how a monitoring company sold its service, supplied staff or chose the diagnosis on a claim, speak with our whistleblower experts about that practice. We work alongside you to build your strongest Medicare whistleblower case and bring in Medicare fraud whistleblower lawyers who understand cardiac monitoring, diagnostic coding and healthcare referral arrangements. From the first account of the sales practice through the pursuit of recovery, we stay on your side.