San Francisco, August 28, 2023—Lincare Holdings Inc., a durable medical equipment company that supplies oxygen to patients with respiratory issues, has agreed to pay $29 million to settle a pathbreaking whistleblower lawsuit brought by Phillips & Cohen LLP. This is believed to be the first successful False Claims Act case against a healthcare supplier for overcharging the Medicare Advantage program for its services.
The lawsuit alleges that Lincare’s actions violated the False Claims Act, which prohibits fraud, including healthcare fraud, against government-funded programs such as Medicare Advantage. The alleged overcharges resulted in millions of dollars of overpayments from the plans and saddled Medicare beneficiaries with monthly copays of up to 20 percent of the improper charges. The lawsuit alleges that Lincare’s actions violated the False Claims Act, which prohibits fraud against government-funded programs such as Medicare Advantage.
The Whistleblower Lawsuit Against Lincare Holdings Inc.: Unveiling a $29 Million Settlement
Medicare Advantage provides coverage for over 31 million seniors and people with disabilities. Under Medicare Advantage, Medicare beneficiaries may enroll in private health plans, known as Medicare Advantage plans, which are primarily government-funded and provide all the benefits of Medicare.
Medicare covers the rental of oxygen concentrators and portable oxygen systems for as long as a patient has the medical need for the equipment. Medicare will only cover monthly rental payments for the equipment for up to 36 months of continuous use. After 36 months, the supplier is required to allow the patient to keep the machine for the useful life of the machine, usually an additional 24 months, and not bill Medicare for the additional rental use. This payment limit is called the oxygen rental cap and protects Medicare from overpaying for rented equipment.
Allegations of Overcharging the Medicare Advantage Program: A Violation of the False Claims Act
In this case, Lincare allegedly billed Medicare Advantage plans for monthly rentals of oxygen equipment beyond the 36-month period the plans allowed, causing false claims to be submitted to Medicare. Lincare allegedly charged and collected co-payments from patients for the improper charges, resulting in patients overpaying Lincare for oxygen equipment as well.
As part of the settlement, Lincare has agreed to identify and repay Medicare beneficiaries who were charged improper copayments.
“This case proves that whistleblowers can protect the Medicare Advantage program from fraud,” said Edward H. Arens, a whistleblower attorney and partner at Phillips & Cohen LLP. “Lincare billed Medicare Advantage plans for as long as it could, causing Medicare and patients to overpay for oxygen equipment,” Arens said. “It is especially gratifying that Medicare beneficiaries also stand to get money back as a result of this settlement.”
Whistleblowers and the Fight Against Healthcare Fraud
The whistleblowers are Benjamin Montgomery and Brandon Haugen, former employees of Lincare in the company’s Libby, Montana office. Lincare is headquartered in Clearwater, Florida.
“We raised concerns about how Lincare was charging patients for oxygen equipment,” said Ben Montgomery, a whistleblower in the lawsuit. “When that did not fix the problem, we decided we had to step forward. We hope this settlement will lead to Medicare beneficiaries getting their money back.”
“We live in a small town and saw how the charges affected our neighbors, including our own families. We needed to do all we could to make sure that seniors were not overcharged,” said Brandon Haugen, a whistleblower in the case.
“These whistleblowers were steadfast in their belief that Lincare was overcharging for much-needed oxygen equipment and did the right thing to report it to the government,” said Emily Stabile, a whistleblower attorney at Phillips & Cohen.
Enforcement and Legal Team Behind the Whistleblower Lawsuit
The United States Attorney’s Office for the Eastern District of Washington investigated the case. The whistleblowers and their attorneys expressed their gratitude to the Justice Department attorneys and investigators, including Assistant United States Attorneys Dan Fruchter, Tyler Tornabene, and Frieda Zimmerman.
In addition to Arens and Stabile, the whistleblowers’ legal team included Travis Mintier and Jennifer Moir from Phillips & Cohen LLP and Matthew Crotty from Riverside Law Group PLLC.
The False Claims Act allows private citizens to file “qui tam” lawsuits against companies that are defrauding the government and recover funds on the government’s behalf. Whistleblowers are provided protection against job retaliation under the False Claims Act and given rewards that range from 15% to 25% of the recovery when the government joins the case.
A copy of the complaint.