A Medical Device Daily

Stryker (Kalamazoo, Michigan) and its former outpatient therapy division, Physiotherapy Associates (Memphis, Tennessee), have agreed to pay the United States $16.6 million to settle allegations that Physiotherapy submitted false claims to Medicare and other federal healthcare programs, the Justice Department reported.

The settlement resolves allegations that Physiotherapy submitted claims for services to Medicare, state Medicaid programs, and the Department of Defense’s TRICARE program that were falsely billed as one-on-one services and that the company improperly retained excess or duplicate payments it received from federal healthcare programs.

Under the terms of the settlement, Physiotherapy agreed also to enter into a corporate integrity agreement with the Office of Inspector General for the Department of Health and Human Services.

“Submitting false claims to our nation’s health care programs is tantamount to stealing from the American taxpayer,” said Peter Keisler, Assistant Attorney General for the Civil Division. “Today’s settlement sends a strong signal that the government aggressively pursues those who engage in such conduct and makes them pay a steep price for their misdeeds.”

The settlement resulted from two qui tams, or whistleblower suits, filed by private citizens against Stryker and Physiotherapy. Both of the whistleblowers, Kerry Deering and Wendy Whitcomb, were employees of Physiotherapy. As a result the settlement, the two will receive nearly $3 million.

Under the False Claims Act, private parties can file an action on behalf of the U.S. and receive a portion of the proceeds of a settlement or judgment awarded against a defendant.

“This case underscores the commitment of this office to vigorously investigate and prosecute qui tam suits,” said David Kustoff, U.S. Attorney for the Western District of Tennessee. “The amount paid to settle this litigation should serve as a deterrent to other healthcare providers who seek to defraud federal healthcare programs.”

The resolution of these two cases was achieved by the Justice Department’s Civil Division, Commercial Litigation Branch, and the U.S. Attorney’s Offices for the District of Massachusetts and the Western District of Tennessee. The Massachusetts case was handled by Assistant U.S. Attorney Eugenia Carris and DOJ trial attorney Arthur DiDio.