U.S. Healthcare Supply and Oxford Diabetic Supply: Fictitious Callers and DME Sales

In the US Healthcare Supply Oxford Diabetic settlement, the suppliers and their owner-presidents agreed to pay more than $12.2 million over allegations that they used a fictitious caller to sell durable medical equipment and then billed Medicare. The government alleged that the suppliers created and controlled Diabetic Experts Inc. to make the unsolicited calls. A different name on the sales pitch, the same suppliers allegedly behind the calls and the Medicare bills.

The Department of Justice announced the settlement on September 7, 2016. U.S. Healthcare Supply LLC, based in Milford, New Jersey, and Oxford Diabetic Supply Inc. sold medical equipment. The government alleged that they used the calling business to get around Medicare’s cold-call restrictions. The health care fraud case reached the owners personally.

What the Settlement Required Each Party to Pay

The national announcement assigned more than $5 million to U.S. Healthcare Supply, more than $1 million to its owner and president, and $6 million to Oxford Diabetic Supply’s owner and president. The two owner-presidents were brothers.

How Diabetic Experts Connected the Calls to the Claims

The government alleged that U.S. Healthcare Supply and Oxford Diabetic Supply set up and controlled Diabetic Experts, used it to make unsolicited calls to Medicare beneficiaries, and submitted claims for the equipment sold through those calls.

The durable medical equipment business can divide customer acquisition, clinical authorization, written orders, fulfillment and billing among different companies. The Department of Health and Human Services Office of Inspector General’s alert on telemedicine arrangements describes a commercial chain involving call centers, staffing companies, practitioners, marketers and brokers. Someone working at a call center may see the sales conversation while someone at the healthcare supplier sees the order or the claim.

Under What Circumstances Can a DME Supplier Make Telephone Contact With a Beneficiary Regarding a Medicare Covered Item?

A supplier needs the beneficiary’s written permission or a qualifying prior supply relationship before calling about Medicare-covered equipment. The Medicare supplier standard permits calls with written permission, calls to coordinate delivery of an item the supplier has furnished, and calls about another covered item when the supplier furnished an item to that person within the preceding 15 months.

Each exception connects the beneficiary to the supplier making the call. Written permission goes to that supplier. The prior-item exception turns on what that supplier furnished. A purchased lead supplies contact information, but does not itself create that supply history.

For an employee looking at a calling campaign, the useful distinction is between a sales prospect and an existing supply relationship. A list of people with Medicare coverage identifies prospective customers. The permission and prior-delivery records answer why this supplier could contact those people about equipment.

Why a Prohibited Call Reaches the Medicare Claim

The Medicare Anti-Solicitation Statute bars payment for items subsequently furnished by a supplier that knowingly makes a prohibited call. That puts the start of the sale inside the payment question. The item can reach the patient and still carry a problem originating in the call that sold it.

The U.S. Healthcare Supply and Oxford allegations followed that connection from solicitation through sales to claims. The government’s concern also reached the patient: a sales pitch could pressure someone into a decision about expensive equipment they might not need.

Why the Source of the Referral Matters

In its 2000 explanation of the supplier rule, the agency rejected a proposed exception allowing telephone contact whenever a medical professional involved in the patient’s care referred the patient. It said that exception could become a loophole for suppliers to buy client lists from medical professionals.

Calling a purchased client list a referral does not change how the supplier obtained it.

What an Insider Can See Across the Businesses

Call records and supplier records can connect the sales operation to the Medicare claim. The supplier holds the written order and supporting clinical documentation, handles fulfillment and submits the bill. Its responsibilities also include keeping proof of delivery and records of beneficiary questions and complaints.

A call-center employee may know who chose the campaign, supplied the leads or directed how callers introduced themselves. An order-processing employee may know which supplier received the resulting business. A billing employee may know how those orders became claims.

We examine how those views fit together: the business directing the solicitation, the permission or prior supply relationship behind the contact, the equipment sold and the supplier seeking payment. If your work crosses those boundaries, you may know why a calling company and a billing company belong in the same account of what happened.

Management instructions, the transfer of leads and the destination of orders can show how separate the operations actually were. Your knowledge of the people making those decisions gives the documents their meaning.

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

You Know Who Was Behind the Calls

Speak to one of our Whistleblower Experts about who ran the calling operation and where its orders went. We bring in durable medical equipment fraud whistleblower lawyers who understand Medicare solicitation cases and stay with you through the whole case, turning your knowledge of the sales and billing into your strongest Medicare whistleblower case.