Medical supplier Lincare reaches $29 million settlement for overbilling Medicare, largest ever for health fraud in the region

A company that provides oxygen equipment agreed to a $29 million settlement to resolve claims, brought by whistleblowers, that it was overbilling Medicare. It is the largest-ever health care fraud settlement in the Eastern District of Washington.

Lincare Holdings, based in Florida, also agreed to extensive corrective actions, according to a news release issued by the U.S. Attorney’s Office in Spokane.

“I am appalled by Lincare’s admitted past practice of putting profits before its obligations to patients and to the Medicare program, and in particular by Lincare’s admitted improper practice of wrongfully collecting co-pays from elderly beneficiaries on fixed incomes and with limited means,” Vanessa Waldref, United States Attorney for the Eastern District of Washington, said in a statement.

The settlement requires Lincare to refund wrongful payments made by Medicare beneficiaries and sets up accountability measures to prevent future fraudulent billing. Lincare did not respond to a request for comment Monday.

Lincare provides medical equipment including oxygen tanks and concentrators in 49 states, excluding Hawaii, and in many rural communities it is the only option, said Dan Fruchter, assistant U.S. Attorney on the case.

Medicare reimburses providers, like Lincare, for the lease payments for three years until Medicare has paid the full price of the equipment.

Following the three-year period, Lincare is required to continue providing the equipment without reimbursement.

That rule also applied to Medicare Advantage beneficiaries who can elect to receive their benefits through a private insurance plan. The majority of people affected in this case were Medicare Advantage members, Fruchter said.

Lincare admitted that it continued to bill Medicare, Medicare Advantage and beneficiaries after it had already received three years of payments.

“That could be relatively small, dollar-wise, you know, $25 a month but obviously, if you’re an elderly person on a fixed income that can make a big difference,” Fruchter said.

The fraudulent billing took place across the country, he added.

The company lacked adequate controls to insure that Medicare Advantage plans and beneficiaries weren’t improperly billed, according to the settlement. The controls in place for traditional Medicare recipients were not always effective, the company acknowledged in the settlement.

Benjamin Montgomery and Brandon Haugen, employees at a Lincare center in Libby, Montana, raised concerns to officials at the regional billing and collections office in Spokane Valley and at corporate headquarters in Clearwater, Florida, when they noticed the problem. The employees were told Lincare would continue its billing practices, according to the news release.

Both men were identified in a news release by their attorneys at Phillips & Cohen, a San Francisco-based firm.

The practice dated back to 2011 in some cases.

“We raised concerns about how Lincare was charging patients for oxygen equipment,” Montgomery said in a news release.

“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.”

The employees went on to file a whistleblower complaint in May 2021.

“We live in a small town and saw how the charges affected our neighbors, including our own families,” Haugen said. “We needed to do all we could to make sure that seniors were not overcharged.”

As part of the settlement, the former employees will share more than $5.6 million. The company will also pay more than $12 million in restitution. The majority of the rest of the settlement is effectively a punitive fine and will be paid to the U.S. Treasury Department.

Lincare entered into a five-year corporate integrity agreement that requires reform and increased oversight of the company’s billing practices.

The agreement makes Lincare’s accountability more than just writing a check and instead requires cultural change that hopefully will prevent future fraudulent billing, Waldref said.

“This case was so meaningful to me because most of the people who receive the needed oxygen care are elderly members of the community and are on fixed incomes,” Waldref said in an interview. “And so not only are we going to be able to fix this moving forward with companies like Lincare, we’re bringing attention to this issue more broadly.”

Under Waldref’s leadership, the U.S. Attorney’s Office has prioritized health care fraud. Last year, it reached a $22.7 million settlement with Providence over Medicare and Medicaid fraud discovered through a whistleblower complaint against two Walla Walla neurosurgeons.

The Inland Northwest is a health care hub, making fraud an important thing to monitor in the region, Waldref said.

“Health care fraud, I think, is so important because at times in our lives we’re all patients. We all need to trust our doctor,” Waldref said. “And it’s so important to be able to have a community where you know that the people taking care of you are valuing your health over profits.”