Bankrupt sleep companies pay $650,000 to settle qui tam allegations

by Ben Vernia | May 27th, 2011

On May 26, the Department of Justice announced that three related Arizona-based sleep therapy and device companies undergoing reorganization in bankruptcy had agreed to pay $650,000 to resolve claims initially brought by a whistleblower:

Areté Sleep LLC, Areté Sleep Therapy LLC and Areté Holdings LLC have agreed to pay the United States $650,000 to settle allegations that their sleep medicine and durable medical equipment facilities in Arizona and Texas submitted false claims to Medicare, the Justice Department announced today.

Today’s settlement resolves False Claims Act allegations that, from Nov. 1, 2002, through Dec. 31, 2009, Areté made false claims to Medicare for diagnostic sleep tests performed by technicians lacking the licenses or certifications required by Medicare rules and regulations. The settlement also resolves related allegations that Areté made false claims to Medicare for medical devices resulting from these same technicians’ tests.

On Jan. 26, 2011, Areté filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court in the District of Arizona. Areté has agreed to pay the False Claims Act settlement from the proceeds of the sale of its assets.

The government announced that the whistleblower will receive $107,250 of the settlement (a 16.5% relator’s share).

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