Durable Medical Equipment Suppliers to Pay $7.5 Million to Resolve False Claims Act Allegations

Written June 2, 2015 by Robert Lu

The U.S. Justice Department announced Wednesday, May 27, 2015, that it had reached a $7.5 million settlement with two medical equipment suppliers, Orbit Medical Inc. and its partial successor Rehab Medical Inc., over allegations that the businesses filed false claims for power wheelchairs and accessories to federal health care programs.

Orbit Medical and Rehab Medical are durable medical equipment suppliers based in Salt Lake City and Indianapolis, respectively.

Medicare will only pay for power wheelchairs for individuals who cannot use other forms of equipment, such as a cane, walker or power scooter, to move around their homes and perform daily activities. Physicians must meet with individuals face-to-face, examine the person and provide a power wheelchair prescription within 45 days of the examination. The treating physician is also required to give documentation that shows the power wheelchair is medically necessary. In the complaint against Orbit, representatives were accused of altering prescriptions by physicians in order to get power wheelchairs paid for by Medicare.

The allegations resolved by the settlement with Orbit and Rehab were filed under the False Claims Act by two former Orbit employees, Dustin Clyde and Tyler Jackson. Under the False Claims Act, a private party can sue for false claims on behalf of the government and share in any recovery. Clyde and Jackson will receive approximately $1.5 million. The United States intervened in the suit on April 2, 2014.

The lawsuit is captioned United States ex rel. Clyde et al. v. Orbit Medical et al., No. 2:10-CV-00297 (D. Utah). The claims settled by the government are allegations only; there has been no determination of liability.

For additional information about the False Claims Act, and the Firm’s resources and services for whistleblowers, please visit the Robbins Geller Rudman & Dowd LLP whistleblower site.