U.S. Healthcare Supply and Oxford Diabetic Supply have agreed to pay the United States more than $12.2 million to resolve allegations that they violated the False Claims Act by using a fictitious entity to make unsolicited telephone calls to Medicare beneficiaries in order to sell them durable medical equipment. 

On Sept. 7, U.S. Healthcare Supply has agreed to pay more than $5 million, and Jon Letko, its owner and president, has agreed to pay more than $1 million. His brother, Edward Letko, the owner and president of Oxford Diabetic Supply, a medical equipment supplier that allegedly also participated in the scheme, has agreed to pay $6 million plus interest. 

“We will continue to hold health care providers accountable for attempting to circumvent Medicare statutes and regulations that help prevent the submission of claims for medically unnecessary services and supplies,” said Principal Deputy Assistant Attorney General Benjamin Mizer, head of the Justice Department’s Civil Division. “Arrangements which clearly disregard program requirements in order to enhance the financial interests of health care providers will not be tolerated.”

The settlement resolves allegations that U.S. Healthcare Supply and Oxford Diabetic Supply set up and controlled an entity called Diabetic Experts, which they used to make unsolicited telephone calls to Medicare beneficiaries in order to sell them durable medical equipment. The companies submitted claims to Medicare for the equipment that they sold based on these unsolicited calls in violation of the Medicare Anti-Solicitation Statute. 

Since January 2009, the Justice Department has recovered a total of more than $30.5 billion through FCA cases, with more than $18.4 billion of that amount recovered in cases involving fraud against federal health care programs.

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