Lincare Settles Oxygen Equipment Fraud Claims for $20M

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By Eric Topor

Allegations that national medical oxygen supplier Lincare knowingly billed Medicare for unnecessary and unused oxygen equipment were settled for $20 million, though the company denied liability ( United States ex rel. Robins v. Lincare, Inc., D. Mass., No. 10-cv-12256, settlement 6/26/17 ).

Whistle-blowers SallyJo Robins, Kathleen Dunlap, Germano Lima, and Roberto Rabassa filed two separate False Claims Act lawsuits against Lincare, which were later consolidated. The four alleged that the company billed for oxygen equipment that Lincare knew wasn’t being used by customers, kept billing Medicare for inactive customers, improperly waived customer copays and deductibles, and paid kickbacks to physicians for customer referrals. The settlement was finalized June 26, and the lawsuit was dismissed the following day.

The whistle-blowers and their counsel, Greene LLP and Hodgson Russ LLP, will together receive $11 million of the $20 million settlement, an unusually high portion of an FCA settlement, with the other $9 million going to the U.S. The whistle-blowers will receive $6 million, and their counsel $5 million, according to the settlement terms.

The FCA’s award-sharing provision entitles whistle-blowers to at most 30 percent of the total settlement amount, and any additional attorneys’ fees (which the FCA also makes available) are generally awarded separately from the actual settlement agreement. The combined whistle-blower award and attorneys’ fees comprised 55 percent of the total settlement amount.

Brian J. Markovitz, with Joseph Greenwald & Laake PA in Greenbelt, Md., told Bloomberg BNA July 3 that the amount of the whistle-blowers’ award and attorneys’ fees “is certainly significant but the fees are probably just the time put in to successfully prosecute the case.” Markovitz, who frequently represents whistle-blowers in FCA cases, noted that there were several whistle-blowers, and more than one law firm, splitting the $11 million, and that the government was still recovering “millions of dollars.”

A Lincare spokeswoman told Bloomberg BNA June 30, “The matter was resolved to the satisfaction of all involved parties, with no admission of liability by any party.” Counsel for the whistle-blowers didn’t return Bloomberg BNA’s request for comment. Lincare is a subsidiary of Linde AG.

Related Lawsuit Pending

Lincare faces another FCA lawsuit with similar allegations from Blayne Dale, a former Lincare salesman. Dale alleged that Lincare performed oxygen saturation tests on Medicare beneficiaries without physician authorization, manipulated the tests to produce results showing low oxygen levels, and used unqualified personnel to deliver unneeded oxygen equipment to Medicare beneficiaries.

Dale’s false claims allegations were dismissed by the U.S. District Court for the Southern District of Mississippi on Feb. 27 under the FCA’s first-to-file provision because the consolidated Robins FCA action was filed before Dale’s lawsuit. However, Dale has since refiled his lawsuit, and the settlement of the Robins lawsuit without any findings on the merits of the allegations could remove the first-to-file barrier.

Hodgson Russ LLP and Greene LLP represented the whistle-blowers. Foley & Lardner LLP represented Lincare.

To contact the reporter on this story: Eric Topor in Washington at etopor@bna.com

To contact the editor responsible for this story: Peyton Sturges at psturges@bna.com

For More Information

The settlement is at http://src.bna.com/qrE.The complaint is at http://src.bna.com/qsC.A searchable database of health-care FCA settlements is available on Bloomberg Law.

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