Healthcare Fraud: Braden Partners, L.P., Has Agreed to Pay To Teijin Pharma USA LLC, for Violating the False Claims Act

Oxygen Equipment Provider Pays $11.4 Million to Resolve False Claims Act Allegations

The Department of Justice announced today that Braden Partners, L.P., doing business as Pacific Pulmonary Services, has agreed to pay $11.4 million to resolve allegations against it and its general partner, Teijin Pharma USA LLC, for violating the False Claims Act by submitting claims for reimbursement to Medicare and other federal healthcare programs for oxygen and related equipment supplied in violation of program rules, and for sleep therapy equipment supplied as part of a cross-referral kickback scheme with sleep clinics.

“This settlement demonstrates our continued pursuit of health care providers who take advantage of federal healthcare programs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will investigate and take action against providers who cut corners and pay kickbacks.”

California-based Pacific Pulmonary Services furnishes stationary and portable oxygen tanks and related supplies, and sleep therapy equipment, such as Continuous Positive Airway Pressure, Bi-level Positive Airway Pressure masks and related supplies, to patients’ homes in California and other states. The government alleged that, beginning in about 2004, Pacific Pulmonary Services began submitting claims to the Medicare, TRICARE and Federal Employee Health Benefits programs for home oxygen and oxygen equipment without obtaining a physician authorization, as required by program rules.

Beginning in 2006, certain of the company’s patient care coordinators also allegedly agreed to make patient referrals to sleep testing clinics in exchange for those clinics’ agreement to refer patients to Pacific Pulmonary Services for sleep therapy equipment. The government alleged that this conduct violated the Anti-Kickback Act, which prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by Medicare, Medicaid and/or other federally funded programs.

“The U.S. Attorney’s Office is committed to taking all appropriate action against companies that disregard patients’ medical needs in pursuit of company profits,” said U.S. Attorney Brian J. Stretch for the Northern District of California. “Patients in federal health care programs expect and deserve medical care that is free from any undue influence and complies with the program safeguards that are in place to protect patients.”

“Home oxygen equipment and related supplies are some of the most fraudulently billed items of durable medical equipment,” said Special Agent in Charge Steven J. Ryan of the Office of Inspector General for the U.S. Department of Health and Human Services. “Medicare suppliers more concerned with profits than compliance will be met with investigation and enforcement.”

This settlement resolves allegations filed in a lawsuit by a former sales representative of Pacific Pulmonary Services, in federal court in San Francisco, California. The lawsuit was filed by Manuel Alcaine under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The Act also allows the government to intervene and take over the action, as it did in this case. Mr. Alcaine will receive $1.824 million of the recovered funds.

The settlement was the result of a coordinated effort by the U.S. Attorney’s Office of the Northern District of California, the Civil Division’s Commercial Litigation Branch, the U.S. Department of Health and Human Services Office of Inspector General, and the various other agencies that administer the federal health care plans at issue.

The case is captioned United States ex rel. Alcaine v. Braden Partners, L.P., dba Pacific Pulmonary Services, et al., Case No. 10-cv-4597 (N.D. Cal.). The claims resolved by the settlements are allegations only; there has been no determination of liability.

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