Rotech Healthcare: Billing for Oxygen Patients Did Not Use

Rotech Healthcare agreed to pay $9.68 million in the Rotech oxygen fraud settlement for knowingly billing Medicare for portable oxygen contents patients did not use or need. The company admitted that it billed regardless of whether those contents were delivered. A former billing-department employee brought the case: the person working with the claims helped expose how far the bills had drifted from the patients they were supposed to serve.

The Florida-based durable medical equipment supplier made those admissions as part of the civil False Claims Act settlement the Justice Department announced on April 12, 2018. The case concerned the oxygen used with portable equipment, a recurring supply that could keep generating claims after the equipment’s rental payments ended.

How Rotech’s Portable Oxygen Billing Worked

Rotech automatically billed Medicare for portable oxygen contents after patients reached the end of their equipment rental period. Between January 2009 and March 2012, the company billed without checking whether patients used or needed the portable oxygen and without obtaining the required proof of delivery.

The payment structure explains where that recurring claim came from. As the settlement announcement describes it, Medicare covered portable and stationary oxygen equipment rentals for up to 36 months. Suppliers could then bill monthly for oxygen contents for up to 24 additional months. Equipment rental and the oxygen used with it were separate parts of the payment arrangement.

Rotech treated the end of the rental period as the trigger for automatic portable-contents billing for its Medicare patients. The patient-specific questions fell away: was the patient using portable oxygen, did the patient need it, and had the supplier delivered it? The Justice Department said Rotech continued the practice despite knowing it produced claims that were ineligible for payment.

Oxygen contents claims went out with no check that portable oxygen had been delivered. Delivery of the equipment at the start of care could not answer whether the later contents were needed or delivered. A past rental had become a reason to keep billing.

The Rental Payments Ended, but the Supplier’s Duties Continued

An oxygen supplier’s work continues after the rental cap. Under Medicare’s oxygen payment law, the supplier must keep furnishing the equipment while the patient needs it for the rest of its useful lifetime, generally five years. Payments for oxygen contents depend on continuing medical need.

That leaves a business with equipment and service obligations after its equipment rental revenue ends. The contents claim becomes especially important at that point. In Rotech’s case, the automatic bills carried on without the checks that tied the contents to the patient.

Delivery is also the supplier’s responsibility. The Medicare supplier standards require proof of delivery. Those records connect the supplier’s claim for payment to something that reached the patient. The case reaches both what happened at the patient’s home and what the billing department had to support its claims.

What Evidence Is Needed to Report Medicare Fraud?

For this kind of oxygen billing, the useful evidence connects the claim with medical need, actual use and delivery. An order, supporting clinical records, delivery records and the billing history show different parts of that relationship. We work with the insider who knows where those accounts diverge and who made the decision to keep billing.

A recurring claim can look routine in a billing system even when the information needed to support it is missing elsewhere.

The relevant connection may be between a patient’s records and a recurring charge, or between an internal concern and instructions to continue billing. The later Lincare case shows why that second connection can matter as much as the first.

Lincare’s Post-Cap Billing Continued Despite Employee Concerns

In its 2023 settlement, Lincare admitted improperly billing oxygen equipment rentals after three years of payments and telling employees who raised concerns that the billing practices would continue. Rotech’s admission concerned portable oxygen contents after the rental period.

Rotech Had Faced Undelivered-Item Allegations Before

In February 2002, the Justice Department announced a separate $17 million settlement with Rotech Medical Corporation over alleged overbilling for respiratory equipment, supplies and services. The government alleged forged or falsified billing documents, double billing, claims for undelivered items and claims for medically unnecessary drugs and equipment.

The announcement described the planned name change to Rotech Healthcare and an agreement to meet integrity obligations intended to prevent recurring billing problems.

Rotech had agreed to safeguards against recurring billing problems. It later admitted billing regardless of delivery. Delivery and medical need had already been at issue in the earlier settlement. The later case brought them back through someone inside the billing operation.

The Billing Employee’s Whistleblower Reward

The Justice Department announced that the former Rotech billing employee would receive a whistleblower reward of approximately $1.65 million from the settlement. The employee’s qui tam case under the False Claims Act led to the settlement and the company’s admissions.

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

You Know Why the Oxygen Bills Kept Going

If you worked with oxygen claims, delivery records or patient care and saw bills continue without the supplies or need behind them, talk with our whistleblower experts. We bring in healthcare fraud whistleblower lawyers who understand respiratory billing and stay beside you to build your strongest oxygen billing whistleblower case.