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$7.5 Million Settlement Reached in Whistleblower Lawsuit Alleging False Medical Records

Orbit Medical Inc. and Rehab Medical Inc. have agreed to pay a $7.5 million settlement at the close of a five-year whistleblower lawsuit. Two former employees of the companies filed the claim, and they alleged that Orbit’s top executives instructed its sales staff to create false medical records to unlawfully bill Medicare for electric wheelchairs.

Under the protections of the qui tam provisions of the False Claims Act, the two employees reported the fraud taking place against the Medicare program. As a result of the settlement, the whistleblowers received $1.5 million in total.

In their suit, the whistleblowers claimed that Orbit intentionally sought out individuals receiving Medicare in an effort to convince them to purchase electric wheelchairs, which would in turn be billed to Medicare for payment. Electric wheelchairs are costly, and Medicare mandates that individuals have proper documentation citing the specific need for the equipment before it is purchased. The suit detailed that despite knowing that electric wheelchairs should only be available to patients when medically necessary, Orbit sold these wheelchairs to Medicare beneficiaries specifically to increase the company’s profits.

Further, the suit alleged that following the unnecessary sales, Orbit hid its misconduct by instructing its representatives to falsify medical records to support the sales. Orbit representatives were told modify language by whiting-out or altering medical records and by forging the signatures of medical professionals. According to the whistleblowers’ 28-page complaint, this common process was referred to as “chiseling.”

The whistleblowers reported the activity under the protection of the False Claims Act’s qui tam provision, which allows individuals to file a lawsuit on behalf of the government and against a company who commits fraud against the government. The government investigated and ultimately intervened in the complaint against Orbit and Rehab Medical Inc.  

If you are aware of misconduct against a government agency and are considering filing a complaint, speak with Steve Kardell at Whistleblower Law for Managers.

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