Global Medical Direct: Alleged Kickbacks Behind Marketing Contracts

In the Global Medical Direct fraud settlement, the companies agreed to pay $5 million from the sale of all their assets to resolve civil False Claims Act allegations involving diabetic-supply kickbacks. The government alleged that the owners arranged marketing contracts that paid other businesses according to the number of patients they referred. For someone inside a supplier, brokerage or marketing company, the revealing detail is what made the payment grow: more patients sent to the supplier meant more money for the referral partner.

Global Medical Inc. and its parent, Global Medical Direct LLC, were Kansas-based mail-order diabetic-supply companies. The Justice Department announced the settlement on October 22, 2013. The alleged false claims involved Medicare and TRICARE.

How the Alleged Diabetic-Supply Kickbacks Worked

The government alleged that the owners caused the companies to pay for patient referrals through marketing contracts between April 1, 2008 and January 31, 2012. The counterparties included insurance brokerage companies and other businesses whose customer bases were likely to contain a high percentage of people with diabetes.

The alleged arrangement reached businesses that already had access to the people a diabetic-supply company wanted as customers. According to the Justice Department, the payments depended on how many patients those businesses referred for supplies. The contract was called marketing, but the government described payment for delivering patients.

The announcement connected that payment arrangement to the Anti-Kickback Statute. Its concern was billing abuse at taxpayers’ expense through Medicare and other federal health care programs. Patients were being steered by payments to the businesses referring them, according to the allegation. Here, the alleged chain ran from the owners’ contracting decisions through the referral partners to supply claims involving the government programs.

A supplier’s billing department sees the claim at the end of that chain. Someone working on the marketing agreement sees the price of bringing the patient in. A claim can describe the supplies while the contract explains why the patient was steered to that particular supplier.

The Business Before the Claim

Global Medical’s alleged referral contracts sat at that customer-acquisition step: a brokerage supplied access to prospective patients, and the supplier paid according to the number referred.

For an insider, that makes the connection between a referral count and a marketing payment as important as the eventual supply claim. The question behind the contract is what the partner was being paid to produce. Here, the government said the payment depended on patients referred for diabetic supplies.

Arriva’s Incentive Went to the Patient

The government alleged that Arriva Medical offered free meters and routinely waived copayments to induce Medicare patients to order supplies, directing the benefit to the patient while Global Medical’s alleged payments went to referral partners.

A Separate Company Made the Sales Calls

The government alleged that U.S. Healthcare Supply and Oxford Diabetic Supply used Diabetic Experts Inc., a company they set up and controlled, to make unsolicited calls to suspected Medicare beneficiaries and then billed Medicare for equipment sold through those calls.

What Evidence Is Needed for Reporting Fraud?

For suspected diabetic-supply referral fraud, the useful evidence connects the marketing agreement, the payment and the referred patient’s supply claims. Contracts, referral lists, invoices, payment schedules, orders and billing records can show how that connection worked. Someone who approved the agreement may know why a partner was chosen. Someone who calculated its payments may know what the supplier was actually buying.

Global Medical’s case puts the referral-count payment at the center. Arriva’s puts the patient offer and copayment decisions there. The Oxford matter puts the calling company and its relationship to the suppliers there. Those are distinct accounts an insider may be able to explain from the work they did every day.

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

You Know What the Marketing Payment Bought

If you saw a supplier pay by the patient, talk with our whistleblower experts about the referral business you know. We build your case with you and bring in healthcare fraud whistleblower lawyers who understand diabetic-supply billing and paid referrals. From the first account of the arrangement through the pursuit of a recovery, we stay beside you.