Healogics pays $22.51 Million to end whistleblower claim for fraudulent billing of hyperbaric oxygen therapy

Healogics, Inc. has agreed to pay  $22.51 million to settle allegations that it violated the False Claims Act by knowingly causing wound care centers to bill Medicare for medically unnecessary and unreasonable hyperbaric oxygen (“HBO”) therapy.  Healogics manages nearly 700 hospital-based wound care centers across the country.

“Medicare beneficiaries are entitled to care based on their clinical needs and not the financial goals of healthcare providers,” said Acting Assistant Attorney General Chad A. Readler for the Justice Department’s Civil Division.  “All providers of taxpayer-funded federal healthcare services, whether contractors or direct billers, will be held accountable when their actions knowingly cause false claims for medically unnecessary services to be submitted.”

Medicare covers HBO therapy, a modality in which the entire body is exposed to oxygen under increased atmospheric pressure, as an adjunctive therapy to treat certain chronic wounds.  The settlement announced today resolves allegations that from 2010 through 2015, Healogics knowingly submitted or caused the submission of false claims to Medicare for medically unnecessary or unreasonable HBO therapy.

Under the settlement, Healogics has agreed to pay $17.5 million, plus an additional $5.01 million if certain financial contingencies occur within the next five years, for a total potential payment of up to $22.51 million.

In addition to resolving its False Claims Act liability, Healogics has entered into a five-year Corporate Integrity Agreement with the Department of Health and Human Services Office of Inspector General which includes, among other things, a claims review and a systems review – both to be conducted by an Independent Review Organization.

“When greed is the primary factor in performing medically unnecessary health care procedures on Medicare beneficiaries, both patient well-being and taxpayer funds are compromised,” said Special Agent in Charge Shimon R. Richmond of HHS OIG. “We will continue to thoroughly investigate health care companies that engage in such fraudulent schemes.”

The allegations resolved by this settlement arose from a lawsuit filed by James Wilcox, a former Director for Research and Quality for Medical Affairs at Healogics, and a separate lawsuit filed by Dr. Benjamin Van Raalte, Dr. Michael Cascio, and John Murtaugh, two doctors and a former program director who worked at Healogics-affiliated wound care centers.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens with knowledge of fraud against the government to bring an action on behalf of the United States and to share in any recovery.  The settlement provides for a whistleblower share of up to $4,276,900.