by Ben Vernia | April 14th, 2012
On April 13, the Department of Justice announced that an Antioch, Tennessee-based company settled a suit originally brought by a whistleblower, alleging unlawful marketing to Medicare recipients, for $18 million. According to DOJ’s press release:
AmMed Direct LLC has agreed to pay the United States and the state of Tennessee $18 million plus interest to settle allegations that it submitted false claims to Medicare and Tennessee Medicaid (TennCare), the Justice Department announced today. Under the agreement, AmMed will pay $17,560,997 to the United States and $439,003 to Tennessee.
The United States and Tennessee allege that, from September 2008 through January 2010, the Antioch, Tenn.-based company submitted false claims to Medicare and TennCare for diabetes testing supplies, vacuum erection devices and heating pads. The United States and Tennessee asserted that AmMed widely advertised free cookbooks in order to induce Medicare beneficiaries to contact AmMed or its hired telemarketing firm. Once AmMed confirmed that a beneficiary was covered by Medicare, AmMed representatives improperly attempted to sell the beneficiary supplies that would be paid for by Medicare. Medicare rules prohibit medical businesses from making unsolicited telephone contact with beneficiaries to sell them their products, unless specific exceptions apply.
The United States and Tennessee further alleged that, as a result of AmMed’s improper marketing, many Medicare beneficiaries who called AmMed to receive the advertised free cookbooks returned their diabetic supplies to AmMed. AmMed, however, failed to timely refund the money to Medicare or TennCare. Rather, AmMed allowed the unpaid refunds to accrue from September 2006 until January 2010. Prior to learning of the United States’ and Tennessee’s investigation, AmMed disclosed to the Medicare Administrative Contractors its failure to refund monies for returned supplies and began paying the refunds to Medicare and TennCare.
The government announced that the whistleblower, a former employee, will receive $2.88 million (a 16% share of the federal and state recoveries).
