Electrostim Medical Services: The Kit Was Full, the Supply Bills Kept Coming

Electrostim Medical Services and its founder and chairman agreed to a $20 million settlement over allegedly excessive and medically unnecessary supplies for TENS and related electrical stimulation devices. The government said EMSI billed for replacement supplies when patients already had what they needed, including traditional electrodes for people using garments that replaced them. For someone inside the supply business, the question is concrete: did the claim follow the patient’s need, or did it follow the billing calendar?

The Florida-based durable medical equipment supplier reached the agreement under the False Claims Act. The Justice Department’s September 27, 2024 announcement described alleged conduct from at least 2018 through 2019, focused on federal healthcare programs that paid for supplies individually, primarily TRICARE.

Medicare’s Monthly Bundle and TRICARE’s Itemized Claims

Medicare and TRICARE paid for replacement supplies differently. Medicare allowed a fixed monthly payment for all medically necessary supplies under a bundled code. TRICARE allowed itemized billing for medically necessary supplies under unbundled codes.

TENS devices deliver a low-voltage electrical current to the skin around an affected body part for short-term pain relief. Electrodes carry the current, and rechargeable batteries power the device. Both require occasional replacement with extended use.

The initial transaction already includes supplies. As the government explained, a physician prescribes a device for home use, the supplier receives the referral and provides a kit containing the device and everything needed for approximately one month. The supplier then submits a single claim for that kit. A separately billable garment can replace traditional electrodes for certain patients.

Once a supplier has that relationship, replacement supplies can bring further business without another device sale.

In the EMSI allegations, the payer also determined how that continuing business could be billed: a monthly bundle or individual supply charges. That makes the sales team’s choice of whom to market to relevant alongside the billing team’s claims. In this case, the government alleged that EMSI and its founder and chairman marketed to beneficiaries whose programs reimbursed supplies individually. The choice of payer was part of the alleged sales strategy. Someone who understands how referrals were pursued may recognize that business decision before ever seeing a supply claim.

Replacement Claims in the First Month

EMSI allegedly billed TRICARE for replacement supplies during the first month even though it knew patients had received kits containing all the initial supplies. The company typically billed replacements monthly, according to the government. The alleged overbilling began before the first kit’s supplies needed replenishing.

The kit’s contents explain what the patient started with. The device claim explains what the supplier billed for that package. The replacement claim shows what it charged separately. We examine those relationships with an insider who knows how the company’s orders and billing actually worked.

Electrodes for Patients Already Using a Garment

The other alleged practice involved monthly claims for traditional electrodes for beneficiaries for whom EMSI also billed a garment. The government alleged that EMSI knew those patients did not need the traditional electrodes.

A wearable garment can contain the electrodes a patient needs. The Justice Department described specialized gloves or socks prescribed in limited circumstances as an alternative to traditional electrodes. The garment itself is separately reimbursable. Here, the alleged mismatch was between the equipment chosen for the patient and the supplies repeatedly billed for that patient.

Product knowledge matters here: someone familiar with what a patient received can explain why a routine-looking supply claim makes no sense.

Patients Allegedly Paid for the Excess, Too

The government’s account reaches beyond the health care program’s bill to the people receiving the supplies:

TRICARE covers military members, retirees and their families. In the government’s telling, those patients paid out of pocket for the same excess that generated the supplier’s claims.

EMSI’s Limited Ability to Pay Shaped the Settlement

EMSI’s settlement amount reflected the limited ability to pay of the company and its founder and chairman.

The settlement resolved allegations that both knowingly pursued the supply-billing scheme without regard to medical necessity. That allegation reaches beyond the person submitting a bill to the decisions behind the supply business. An insider may know who directed the marketing, what the company knew about its kits and how it handled garment users.

An Earlier TRICARE Case Over Excess TENS Electrodes

DJO Global and its subsidiary Empi agreed to pay $7,620,000 in a separate TENS-electrode settlement announced on January 23, 2018. That case concerned TRICARE and alleged excessive electrode quantities from 2010 through 2015.

The government described Empi’s technique as assumptive selling. Sales representatives allegedly contacted beneficiaries and acted as though those patients had already indicated a need for electrodes, inducing orders for excessive quantities. The alleged sales process supplied an assumption of demand where the patient’s actual need should have been.

The common thread is the alleged sale and billing of more TENS supplies than patients needed.

A patient’s apparent order, the equipment already provided and the quantity claimed each tell part of the story. We connect those parts with you to understand how a recurring supply claim could become a false claim. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know What the Patient Already Had

If you saw replacement claims start with a full kit or electrode bills continue after a garment replaced them, speak to one of our Whistleblower Experts about the supply billing. We build the case with you, bring in durable medical equipment fraud whistleblower lawyers who understand Medicare and TRICARE claims, and stay beside you as we pursue your strongest whistleblower case.