Pacific Pulmonary Services: Oxygen Claims and Sleep-Clinic Cross-Referrals
In the Pacific Pulmonary Services Braden settlement, Braden Partners agreed to pay $11.4 million to resolve allegations of oxygen claims without physician authorization and sleep-clinic referral kickbacks. The alleged exchange was straightforward: send patients to a sleep-testing clinic, and the clinic sends patients back for equipment. For someone who worked with those referrals, the important part is the agreement behind them and the government claims that followed.
The Justice Department announced the settlement on April 25, 2017. It resolved allegations against Braden Partners, L.P., doing business as Pacific Pulmonary Services, and its general partner, Teijin Pharma USA LLC. A former Pacific Pulmonary sales representative brought the qui tam case in federal court in San Francisco, and the government joined it.
The Respiratory Business Behind the Referrals
Pacific Pulmonary supplied equipment to patients at home, giving it a commercial interest in both the initial order and the continuing supply relationship. The California-based company furnished stationary and portable oxygen tanks and related supplies, along with sleep-therapy equipment including CPAP, bi-level positive airway pressure masks and supplies. Its patients lived in California and other states.
Winning a sleep-equipment referral can also mean supplying replacement masks, headgear, tubing and filters after the initial equipment rental ends.
Oxygen has a different arrangement. Under Medicare’s oxygen equipment payment rules, equipment payments stop after 36 months, while the supplier must continue furnishing equipment during medical need for the remainder of its useful lifetime.
CPAP equipment, by comparison, transfers to the patient after 13 paid rental months. Replacement supplies can continue after that. That is what gives a sleep-clinic referral value beyond the first delivery.
Oxygen Claims Without Physician Authorization
The government alleged that, beginning in about 2004, Pacific Pulmonary submitted claims for home oxygen and oxygen equipment without obtaining the physician authorization required by the programs. The claims went to Medicare, TRICARE and the Federal Employee Health Benefits program.
For an employee handling orders or billing, the useful connection is between the authorization for a particular patient and the claim submitted for that patient’s oxygen equipment.
A separate oxygen case shows how the same patient relationship can produce a different billing problem later. In its 2023 settlement, Lincare admitted billing Medicare, Medicare Advantage plans and beneficiaries for oxygen equipment rentals after it had already received three years of payments. It also admitted that officials directed the company to continue its billing practices after employees raised concerns. Pacific Pulmonary’s oxygen allegation concerned authorization at the beginning. Lincare‘s admissions concerned continued collection after the rental payments should have stopped.
Sleep-Clinic Cross-Referrals
Beginning in 2006, certain Pacific Pulmonary patient care coordinators allegedly agreed to refer patients to sleep-testing clinics in exchange for those clinics referring patients to Pacific Pulmonary for sleep-therapy equipment. The Justice Department described the arrangement as a cross-referral kickback scheme.
The alleged benefit was business: the clinic gained patients for testing, and Pacific Pulmonary gained patients for equipment. The government alleged that the exchange violated the Anti-Kickback Act, the federal prohibition on kickbacks for referrals covered by federal health care programs.
That puts the patient care coordinator at an important point in the story. The coordinator could send a patient into testing, while the clinic could direct an equipment referral back to the supplier. An insider who knows what the parties agreed can explain why that traffic moved as it did. The claims show what the government was then asked to pay for.
The government’s allegation was that an exchange of business influenced those referral decisions.
What Is the Reward for a Medicare Fraud Whistleblower?
A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. In the Pacific Pulmonary case, the Justice Department announced that the former sales representative would receive $1.8 million of the recovered funds.
The Corporate Integrity Agreement
The resolution also involved a Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General. HHS-OIG’s enforcement entry identifies the agreement with Braden Partners doing business as Pacific Pulmonary Services.
What a Referral Insider Can Explain
We work with insiders to connect physician authorization, referral arrangements and equipment claims for the same patients. Together, we examine who directed the referrals, what a clinic and supplier promised each other, and how those decisions reached the billing operation.
An order or a claim shows one part of the transaction. Someone who handled the relationship may know why a patient went to a particular clinic and why the equipment business returned to a particular supplier. That knowledge gives meaning to the records. In an oxygen case, the connection may be between missing physician authorization and claims. In a sleep-equipment case, it may be between the promise of return referrals and the orders that followed.
You Know Why the Referrals Came Back
If you saw oxygen claims move without physician authorization or sleep-clinic referrals traded for equipment business, speak to one of our Whistleblower Experts about what happened inside the supplier. We build your strongest whistleblower case with you and bring in healthcare fraud whistleblower lawyers who understand respiratory equipment billing and referral arrangements. Our experts stay beside you as the evidence develops and the case moves forward.
