The United States Attorney’s Office for the Middle District of Florida recently settled a False Claims Act case against Healogics, Inc. (“Healogics”) in which it was alleged that Healogics had knowingly billed Medicare for medically unnecessary and unreasonable hyperbaric oxygen therapy (“HBO therapy”). Under the settlement, Healogics agreed to pay $17.5 million, plus an additional $5.01 that is dependent upon certain financial contingencies. The settlement also provides for a whistleblower share of up to $4,276,000. Healogics also entered into Corporate Integrity Agreement (“CIA”) with the OIG. Pursuant to the five-year CIA, Healogics is subject to both a claims review and a systems review, which are to be performed by an Independent Review Organization.

Healogics manages almost 700 hospital-based wound care centers across the country. The litigation centered around HBO therapy, in which the entire body is exposed to oxygen under increased atmospheric pressure. HBO therapy can be used to treat certain types of chronic wounds.

The allegations against Healogics stemmed from two separate lawsuits: one filed by relator James Wilcox, a former Healogics employee, and a separate lawsuit filed by Dr. Benjamin Van Raalte, Dr. Michael Cascio, and John Murtaugh, who were respectively physicians and a program director who had worked at Healogics-affiliated wound care centers. The relators alleged that, from 2012 to 2015, Healogics knowingly submitted, or caused the submission of, false claims to Medicare for medically unnecessary or unreasonable HBO therapy.

In a Third Amended Complaint that was filed in May 2016, there were allegations of multiple representative instances in which false claims for HBO therapy were purportedly submitted to the government for reimbursement. It was also alleged that patients were subjected to unnecessary procedures, and that “The Healogics Way” – the company’s mission statement for its employees – actually “meant, among other things, fraudulently upcoding debridements, falsifying HBOT eligibility in order to bill for unnecessary but expensive treatments, and requiring all patients to undergo unnecessary testing called transcutaneous oxygen measurement or TCOM.” See United States ex. rel. Van Raalte, et al. v. Healogics, Inc., 14-CV-283 (M.D. Fla. 2014). Notably, the litigation brought by Mr. Wilcox, United States ex rel. Wilcox v. Healogics, Inc., et al., 15-CV-1510 (M.D. Fla. 2015), involved similar accusations against Healogics.

This litigation provides an example of the Government’s focus on cases involving allegations of medially unnecessary treatments being provided to patients. The Government often demonstrates particular interest in such cases both because of the potential financial harm to the public fisc, but also because of the risk of patient harm from patients being exposed to unnecessary medical treatments. The case emphasizes the importance of providers offering medically necessary treatment, and of making individualized decisions about patient care that are tied to the specific circumstances of each particular patient.