Eargo hearing aid company pays over $34 million to settle claims it used false diagnosis codes

by Ben Vernia | April 30th, 2022

On April 29, the Department of Justice announced that California-based Eargo, Inc., had agreed to pay $34.37 million to settle civil charges that the company used false diagnostic codes to obtain reimbursement from the federal employee health insurance program for its hearing aids. According to DOJ’s press release:

Eargo Inc. (Eargo), a for-profit public corporation headquartered in California that sells and dispenses hearing aid devices directly to customers nationwide, has agreed to pay $34.37 million to resolve allegations that it submitted or caused the submission of claims for hearing aid devices for reimbursement to the Federal Employees Health Benefits Program (FEHBP) that contained unsupported hearing loss diagnosis codes.

The FEHBP, administered by the U.S. Office of Personnel Management (OPM), is the largest employer-sponsored group health insurance program in the world. It provides health benefits through various health insurance carriers and covers over eight million federal employees, retirees, former employees, family members and former spouses. Certain FEHBP health insurance plans elect to offer a hearing aid benefit, which varies from plan to plan. FEHBP carriers that offer a hearing aid benefit require that claims for hearing aid devices include a hearing loss-related diagnosis code. These diagnosis codes must be supported by a hearing loss diagnosis, which is typically based on a hearing test performed by a health care provider.

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The United States alleged that, from Jan. 1, 2017, through Jan. 31, 2021, Eargo included unsupported hearing loss-related diagnosis codes on claims for hearing aid devices that Eargo submitted to the FEHBP and on invoices — called superbills — that Eargo provided to FEHBP beneficiaries to obtain reimbursement for such devices from the FEHBP. The United States further alleged that between Feb. 1, 2021, and Sept. 22, 2021, Eargo continued to include these unsupported hearing loss-related diagnosis codes on claims and superbills — even after completing an internal review of its billing and coding practices in January 2021 — resulting in Eargo knowingly submitting or causing the submission of false claims for payment to the FEHBP.

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The case apparently arose from a government investigation, rather than from a whistleblower’s complaint under the qui tam provision of the False Claims Act.

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