Today, the United States Justice Department announced the $2.715 million resolution of a qui tam lawsuit (i.e. a whistleblower lawsuit) with Cardinal Health, Inc. The lawsuit was filed pursuant to the False Claims Act on behalf of a former employee of Innovative Therapies, Inc. which was subsequently acquired by Cardinal. The whistleblower was represented by Jerry Martin and Seth Hyatt of Barrett Johnston Martin & Garrison along with attorneys at Robbins Geller Rudman & Dowd.
The whistleblower alleged that Innovative caused false claims to be submitted to Medicare through its marketing of certain negative pressure wound treatment devices as durable medical equipment (DME) when those devices were actually disposable and did not qualify as DME. Specifically, the whistleblower alleged that the devices were not durable, did not have a three year life expectancy as required by federal regulations, and that Innovative instructed suppliers to throw the devices away rather than re-use them with multiple patients. This distinction is important, because Medicare will pay for DME but will generally not pay for disposable medical equipment. As a result, suppliers submitted false or fraudulent claims to Medicare for the devices as DME for over five years.
The government has agreed to pay the whistleblower $488,700 as a reward for coming forward and bringing this information to the attention of regulators.
“We are very pleased with this outcome,” said Jerry Martin of Barrett Johnston Martin & Garrison, LLC. “The government moved quickly and worked diligently to investigate these allegations and negotiate a fair and just outcome on behalf of the taxpayers. We appreciate their hard work and efforts,” Martin added.
Martin, who served as the presidentially appointed United States Attorney from 2010-2013, focuses his practice on representing whistleblowers who wish to come forward and expose fraud on state and federal programs such as Medicare and Medicaid. The False Claims Act provides a mechanism for whistleblowers to report fraud and share in the government’s recovery. Last year, whistleblowers were paid out over $500 million in reward payments for filing qui tam lawsuits that lead to recoveries to the federal treasury.
“Middle Tennessee is a hub for health care industries that are dependent upon Medicare and Medicaid dollars. The Department of Justice can’t effectively monitor the billions of government funds that flow through this district without the assistance of brave whistleblowers who come forward and report fraud,” said Martin.
The Department of Justice press release can be found here:
Durable Medical Equipment Manufacturer Agrees To Pay $2.715
Million To Resolve False Claims Allegations
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