Two Brothers and their Diabetic Medical Equipment Companies Agree to Pay Over $12 Million to Settle False Claims Act Allegations

Brothers Jon P. Letko and Edward J. Letko and the two medical supply companies they own, U.S. Healthcare Supply LLC, of Milford New Jersey, and Oxford Diabetic Supply Inc. have agreed to pay over $12 million to resolve allegations that they violated the False Claims Act by using a fictitious entity to make unsolicited phone calls to Medicare beneficiaries in order to sell them durable medical equipment.  The companies then submitted claims to Medicare for the equipment that they sold based on these unsolicited calls, which violated the Medicare Anti-Solicitation Statute.  Of the over $12 million settlement, Jon P. Letko has agreed to pay more than $1 million and his company, U.S. Healthcare Supply LLC, will pay over $5 million and Edward J. Letko’s company Oxford Diabetic Supply Inc. will pay $6 million plus interest.

“Cold-calling people to sell them expensive medical equipment is prohibited for a reason: unsuspecting patients shouldn’t be coerced into making medical decisions about devices and equipment – which they may not even need – on the basis of a sales pitch,” said U.S. Attorney Paul J. Fishman for the District of New Jersey.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $30.5 billion through False Claims Act cases, with more than $18.4 billion of that amount recovered in cases involving fraud against federal health care programs.

Read the full DoJ Press Release

To report fraud, contact Frohsin Barger & Walthall.