The Justice Department announced today that Rotech Healthcare Inc., a Florida-based respiratory equipment supplier, has agreed to pay $9.68 million for knowingly submitting false claims for portable oxygen contents to Medicare. As part of the settlement, Rotech admitted that it knowingly billed portable oxygen contents to Medicare for beneficiaries who did not use or require them. The Company further admitted to billing Medicare regardless of whether such contents were delivered.

“This settlement serves as a warning to suppliers who bill first and ask questions later,” said Acting Assistant Attorney General Chad A. Readler, head of the Justice Department’s Civil Division. “We will investigate and take action against companies who cut corners and place profits over compliance with Medicare’s billing requirements.”

Medicare covers rentals of portable and stationary oxygen equipment for up to 36 months and allows suppliers to bill monthly for oxygen to be used with that equipment for up to 24 additional months after the rental period. Between January 2009 and March 2012, Rotech automatically billed Medicare for portable oxygen contents for all Medicare beneficiaries after the 36-month rental period, without verifying that the beneficiaries used or needed portable oxygen, and without obtaining the requisite proof of delivery. Rotech continued this practice despite knowing that it resulted in the submission of claims for portable oxygen contents that were ineligible for reimbursement.

“Many people believe that healthcare fraud is a victimless crime; I assure you it is not,” said United States Attorney Joseph D. Brown of the Eastern District of Texas. “Medicare is funded largely by you and me, the American taxpayers, and fraud contributes to runaway health care costs. I commend the whistleblower who had the courage to come forward and who worked with investigators to get to the bottom of this case. Because of her, we were able to recoup millions of dollars improperly paid to Rotech.”

The allegations resolved by this settlement arose from a whistleblower lawsuit filed under the False Claims Act by Janet Hale, a former employee in Rotech’s billing department. Under the False Claims Act, private citizens can sue on behalf of the government and share in any recovery. Ms. Hale will receive $1,645,600.

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Eastern District of Texas, the Federal Bureau of Investigation, the Department of Health and Human Services Office of Inspector General, and the Texas Office of the Attorney General – Medicaid Fraud Control Unit.

The case is captioned United States ex rel. Hale v. Rotech Healthcare Inc., 4:14-cv-545 (E.D. Tex.).