Innovative Therapies and Cardinal Health: Wound Pumps With a Programmed Limit

Innovative Therapies and Cardinal Health agreed to pay $2,715,000 in an NPWT settlement over allegations that Innovative Therapies marketed wound devices as durable medical equipment despite knowing the devices had too short an expected life to qualify. A former employee brought the case, connecting what the manufacturer knew about its product to what suppliers billed Medicare.

Innovative Therapies made Quantum negative pressure wound therapy devices. The U.S. Attorney’s Office for the Middle District of Tennessee announced the settlement on June 29, 2017. The allegation concerned certain models whose programmed supply of therapy hours fell short of the expected life of durable medical equipment. Medicare was allegedly paying durable-equipment rates for devices that were never used again once their programmed hours expired.

What Is Considered Durable Medical Equipment?

The Medicare Payment Advisory Commission defines durable medical equipment as items that withstand repeated use, serve primarily a medical purpose, generally are useful only because of illness or injury, and are appropriate for use in the home. Repeated use is part of the benefit’s definition. It gives the label durable medical equipment a financial consequence.

For negative pressure wound therapy, the E2402 pump is rented, while A6550 dressing kits and A7000 canisters are recurring consumables. The pump and the supplies generate different claims around the same course of treatment.

The NPWT coverage policy also requires written designation from the Pricing, Data Analysis and Coding contractor for systems to qualify for E2402 billing. The coding decision connects a particular product with the code a supplier can bill.

That structure explains why the classification mattered in the Innovative Therapies case. Marketing a pump as durable medical equipment tells the supplier which payment category the product belongs in. The government’s allegation was that the product’s programmed life contradicted the category under which suppliers billed it. The sales description reached all the way to the Medicare claim.

How the Alleged NPWT Claims Worked

The Justice Department’s account of the whistleblower’s complaint describes a limit built into the product:

A programmed limit on therapy hours is a product decision someone inside the manufacturer can know about before a supplier submits a claim. That is what makes this case useful to people in product development, reimbursement and sales. The allegation connected knowledge inside the manufacturer with the billing it encouraged outside the company.

Do DMEPOS Providers Bill Medicare?

Durable medical equipment suppliers billed Medicare for the devices, allegedly because of Innovative Therapies’ marketing. The settlement reached Innovative Therapies and Cardinal Health for allegedly causing those claims. The health care supplier submitting the bill and the manufacturer responsible for the product representation occupied different places in the alleged chain.

Cardinal Bought the Company After the Conduct Began

Cardinal purchased Innovative Therapies in August 2014, after Innovative Therapies had initiated the alleged conduct covered by the settlement. The Quantum line became the PRO series following the acquisition.

The former Innovative Therapies employee filed the whistleblower case in May 2015. The sequence matters: the alleged conduct began at Innovative Therapies, Cardinal acquired the company, and the employee’s case followed the purchase.

The settlement named Innovative Therapies and its ultimate parent, Cardinal Health, together. A Quantum product record and a later PRO reference can belong to the same product history even though the name on the sales material has changed.

When the Product Does Not Match the Payment Category

In the Dia-Foot settlement announced in January 2022, the company agreed to pay $5,538,338 over allegations that it sold custom diabetic shoe inserts that were not custom-fabricated in accordance with Medicare standards. The alleged mismatch concerned fabrication rather than a wound pump’s working life. In each case, a product sold into a Medicare category allegedly lacked a feature that category required.

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 Innovative Therapies case, the former employee’s announced reward represented an 18% share of the settlement.

The Justice Department said its investigation began with that employee’s qui tam complaint. Someone inside the manufacturer supplied the information that led to the case, even though the alleged false claims traveled through suppliers. That is the opportunity this case illustrates for people whose knowledge concerns product design or marketing rather than the final bill.

What Evidence Is Needed to Report Medicare Fraud?

We work with insiders to connect the device’s programmed life, its marketing as durable medical equipment and the supplier claims that followed. In a case about product classification, the important question is how the company turned what it knew about a device into what it told the businesses billing Medicare.

Someone who understands the device may see a problem that looks routine in a healthcare billing system. Someone who handles reimbursement may see how a product description turned into a recurring payment. Our whistleblower experts bring those accounts together and work with you to establish who knew about the mismatch. Your knowledge of the product and how the company sold it is the starting point for that conversation.

You Know the Device Behind the Claim

If you know a wound device’s limits and how the company sells it to Medicare suppliers, speak with our whistleblower experts about that mismatch. We build the case with you and bring in medical device fraud whistleblower lawyers who understand product classification and supplier billing. We stay beside you as your knowledge of the product becomes the foundation for pursuing the government’s recovery.