Lincare to pay $29 million for overbilling Medicare for oxygen equipment

Vanessa R. Waldref, the United States Attorney for the Eastern District of Washington, made the announcement in a press release Tuesday.

Lincare provides oxygen equipment to patients with respiratory ailments such as Chronic Obstructive Pulmonary Disease (COPD), including leasing oxygen tanks and home and portable oxygen concentrators to assist patients to breathe while in the home or traveling.

Between 2012 and 2023, traditional Medicare (also known as Medicare Part B) reimbursed providers such as Lincare for the lease payments on oxygen equipment, but after three years of monthly lease payments, providers such as Lincare were required to continue to provide the oxygen equipment to the patient, but were not eligible for additional rental payments because Medicare had already reimbursed the provider for the full purchase price of the equipment.

Under Medicare Advantage, also known as Medicare Part C, Medicare beneficiaries may elect to receive their Medicare benefits through a private insurance plan offered by an insurance company, known as a Medicare Advantage Plan or an "MA Plan." MA Plans are required to provide the same coverage and benefits as traditional Medicare, but they may set their own rules for reimbursement and beneficiary co-pays.

Between 2016 and 2023, many Medicare Advantage Plans adopted the same requirement that limited providers like Lincare to three years of rental payments for oxygen equipment. After three years of payments, Lincare and other providers were required to continue to provide the equipment for the remainder of its useful life, but were not permitted to charge rental payments to MA Plans, or charge any co-payments to beneficiaries.

In the settlement announced Tuesday, Lincare admitted that it improperly billed Medicare, MA Plans and beneficiaries for oxygen equipment rental payments and co-payments after it had already received three years of payments. Lincare admitted that it lacked adequate controls to ensure that MA Plans and beneficiaries were not improperly billed after three years of rental payments had already been received.

Lincare additionally admitted that for traditional Medicare recipients, it had controls in place to prevent improper billing, but that those controls were not always effective.

Finally, Lincare admitted that when Lincare employees raised concerns about Lincare's billing practices, Lincare officials in its Regional Billing and Collections Office located in Spokane Valley, Washington, and at Lincare's corporate headquarters in Clearwater, Florida, instructed them that Lincare would continue its billing practices. The settlement resolved claims that Lincare's conduct violated the False Claims Act.

"One of the most important responsibilities we have is protecting vulnerable members of our community such as the elderly," said U.S. Attorney Waldref. "Elderly members of our community are among the most likely to be targeted by fraud, false billing scams and abuse. This is one reason that the U.S. Attorney's Office, the Department of Justice, and our law enforcement partners, have made combatting elder fraud and abuse a top priority. 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. That said, I am heartened that, following our investigation, Lincare stepped up, accepted responsibility, and committed to make things right, not only by refunding overpayments received by Medicare, but by identifying and repaying any beneficiaries from which it improperly collected co-payments.

As part of the settlement, Lincare entered into a five-year Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). That Agreement requires, among other things, that Lincare implement a robust compliance and reporting program as well as a number of significant billing reforms and practices. Additionally, the agreement requires that Lincare retain, at its expense, independent experts to review its claims and billing practices to ensure they are appropriate.

Assistant United States Attorney Dan Fruchter stated, "I want to express special appreciation for the exceptional investigative and analytical work performed by HHS-OIG in this case. This was a complex case with novel issues. This result would not have been possible without the hard work, investigative skill and subject matter expertise of our partners with HHS-OIG. I also want to recognize the two whistleblowers who came forward and provided vital information, making this result possible."

According to court documents, the case began in May 2021 when two whistleblowers, former employees in Lincare's center in Libby, Montana, filed a complaint under seal in the U.S. District Court for the Eastern District of Washington. When a whistleblower, or "relator," files a qui tam complaint, the False Claims Act requires the United States to investigate the allegations and elect whether to intervene and take over the action or to decline to intervene and allow the relator to go forward with the litigation on behalf of the United States.

The relator is generally able to then share in any recovery. In this case, according to court documents, the United States intervened in the action in July 2023, and subsequently reached this settlement. Pursuant to the settlement agreement, the relator will receive $5.6 million of the total settlement amount.