Dia-Foot: Generic Foot Models, Custom-Insert Claims

In the Dia Foot custom inserts settlement, Dia-Foot and its president and CEO agreed to pay $5,538,338 over allegations that diabetic shoe inserts sold as custom were made using generic foot models. According to the government, patients believed they were getting inserts made for their feet, while the alleged shortcut was hidden in production. Someone who knew how those inserts were made could see a difference that the custom label concealed.

Foot Care Store, Inc., doing business as Dia-Foot, was a diabetic-shoe company based in Wellington, Florida. A former employee brought the allegations through a False Claims Act qui tam case. The Justice Department announced the civil settlement on January 12, 2022, addressing alleged conduct between 2013 and 2018.

What Custom Meant in the Diabetic-Shoe Business

The custom-insert allegation concerned whether the product was made for the individual patient’s foot. The government said Dia-Foot represented many inserts that way while making them from generic models. A prescription and a label can say custom. Only the workshop can make it custom.

Medicare’s therapeutic-shoe benefit includes extra-depth shoes with inserts and custom-molded shoes with inserts for people with diabetes.

The annual allowance includes one pair of depth shoes and three pairs of inserts, or one pair of custom-molded shoes and two additional pairs of inserts. A new certification statement is required each year. Inserts are a recurring part of this supply business.

The certifying physician manages the patient’s diabetes, the prescribing practitioner writes the footwear order, and the supplier furnishes it. The prescriber may also supply the footwear.

A clinician could prescribe a custom product, a supplier could furnish an insert, and a bill could describe it as custom. The question inside the manufacturing operation remained whether the insert was actually made for that patient’s foot. The government alleged that patients had prescriptions and believed they were receiving custom products.

The Justice Department explained why that matters: people with diabetes can develop nerve damage, ulcers and poor circulation in their feet. Untreated problems can lead to amputation in severe cases. Custom inserts are prescribed to help prevent those problems.

The Generic-Model Allegation

The government alleged that Dia-Foot sold the inserts nationwide through two routes. Dia-Foot billed Medicare and Medicaid itself for the custom version, or sold the inserts to other providers who then billed government health care programs for custom inserts.

That second route puts the manufacturer and the billing provider in different places in the transaction. A provider buying inserts could submit the claim while the fabrication decisions happened at Dia-Foot.

The Justice Department described the alleged financial advantage plainly: using generic models allowed Dia-Foot to produce and sell more inserts and increase profits by cutting corners. The alleged shortcut was in production. The custom description survived into the claim.

For an honest supplier paying for individual fabrication, that is a cost its competitor allegedly avoided. For the patient, it is a product different from the one prescribed and expected. For Medicare and Medicaid, it is a bill for the custom version. The same manufacturing decision can reach all three.

The Medicare Approval Allegation

The government alleged that Dia-Foot advertised Medicare compliance and approval for its custom diabetic shoe inserts even though it obtained those approvals with false information. Dia-Foot allegedly used Medicare approval to sell the very products it was making from generic models.

Sales and approval records therefore belong beside the fabrication and billing records when we examine this kind of case.

Dia-Foot’s OIG and DOJ Settlement Amounts Differ

The OIG and the Justice Department report different settlement amounts for Dia-Foot. The Justice Department announced the joint settlement with Dia-Foot and its president and CEO described above. The HHS-OIG Integrity Agreement listing lists the settlement as $2,769,169.

The company and its president and CEO also entered a three-year Integrity Agreement with HHS-OIG. According to the Justice Department, it required updated compliance policies and quarterly independent review of Dia-Foot’s Medicare and Medicaid claims.

The Same Mismatch in Another Insert Case

In a separate Brooklyn-area criminal case, medical-equipment company owners and operators admitted through their guilty pleas that they submitted or caused false Medicare claims for custom-molded inserts while supplying off-the-shelf inserts. The Justice Department’s account of those guilty pleas describes the same mismatch between the product furnished and the custom product billed.

In each account, an insert reached a patient. The issue was the difference between that insert and the description used to obtain payment. A shipping record can show that something was supplied. Fabrication records address what it was.

What Evidence Is Needed to Report Medicare Fraud?

Our whistleblower experts work with you to identify which records show whether custom-insert claims matched the product made. Our review focuses on how the business carried the custom description from production through sales and billing, and who knew whether it matched the work being done.

A fabrication employee may know which foot models the operation used. A sales employee may know what customers were told about customization and approval. A provider buying the inserts may hold the product descriptions and the claims submitted for them. Each sees a different part of the transaction described in the government’s allegations.

We work with an insider to connect those different views of the business, including the decisions that kept the custom description in use. The employee who knows the factory and the provider who sees the bill may be describing the same practice from opposite ends.

The former employee who brought the Dia-Foot allegations was to receive a share of the settlement, according to the Justice Department announcement. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know How the Inserts Were Made

If you saw generic models used for products sold and billed as custom, speak to our whistleblower experts about how the inserts were made. We work with you to build your strongest custom-insert healthcare fraud case, bring in whistleblower lawyers who know medical-equipment fabrication and billing disputes, and remain your partners throughout the case.