DME Manufacturer to Pay out $24 Million in Second False Claims Suit

Sarasota, FL (WorkersCompensation.com) – Failure to provide respiratory protection is one of the top cited violations. According to a November 2021 report from the U.S. Department Of Labor, while the U.S. saw a decline in injury and illness cases on 2020, the total worker illnesses more than quadrupled. In fact, the number of respiratory illness cases increased by nearly 4,000 percent.

Durable Medical Equipment (DME) providers play a large role in respiratory illness as they supply treatment equipment such as ventilators, oxygen concentrators, and CPAP and BiPAP systems. According to CMS, the requirements for billing DME includesg not only a documented face-to-face encounter, but also a written order and prior authorization. According to a recent news release, a DME manufacturer has settled to resolve allegations of paying out kickbacks in the form of free physician prescribing data.

Philips RS North America LLC is one of the largest DME manufacturers in the U.S., and is based in Pittsburg, Pennsylvania. Formerly known as Respironics Inc., the complaint filed in South Carolina by a former employee from 2016 forward, alleges that from 2014 to 2020 the company enticed DME suppliers to choose their equipment in exchange for free “HMS” or “Health Market Science” information. Respironics denies the allegations.

According to the complaint, Respironics purchased data that included prescribing details from physicians across the country. The information included not only specific provider information that was categorized by region, but also details about which equipment was ordered and who the item was supplied by. The information would allow DME suppliers to market more effectively to providers in their supply areas, and would have costs up to $160,000 per year, depending on the size of the data.

The data that the Respironics purchased was compiled by LexisNexisk, and then sold to the VGM Group, and marketed under VGM Market Data. Claiming to be a marketing leader for referral sources for the DME industry, the company claimed for a subscription cost, it could help companies identify their top referral sources.  For one product information on an individual state, the cost was $7,500 per year.

In 2016, Respironics had already agreed to pay out $34 million to settle a case involving violation of the False Claims Act and Anti-Kickback Statute by providing free call center services to DME suppliers. As part of the settlement, the company had to enter into a Corporate Integrity Agreement with CMS’s Office of the Inspector General. Because of this agreement, the new complaint that alleges that Respironics employees falsely certified their compliance for the 2016 agreement.

Phillips RS North America has agreed to pay out $24 million to resolve the allegations of violating the False Claims Act through kickbacks to DME suppliers in the form of the free referral data. A total of $2.13 million will be paid out to various states involved in the complaint, and the remaining paid out to the United States. Additionally, Respironics will enter into yet another Corporate Integrity Agreement. The whistleblower and former employee Jeremy Orling will received $4.3 million as his part of the settlement.

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