Braden Partners LP and Teijin Pharma USA LLC doing business as (dba) Pacific Pulmonary Services refused to admit liability in a healthcare fraud whistleblower case accusing the company of Medicare and Medicaid fraud dating back to 2010.

The whistleblower lawsuit was brought against the defendant by a former employee, Manuel A. Manuel worked out of the San Leandro, Calif. office in Alameda County from the spring of 2009 to early 2010.

The case was filed in the U.S. District Court of Northern California in 2010. Later, the U.S. Government joined him and took over responsibility for trying the case. The accusations of the lawsuit were considered violations of the U.S. False Claims Act.

Pacific Pulmonary Services is in the business of providing sleep apnea equipment such as bilevel positive airway units (BPAP), continuous positive airway units (CPAP), home oxygen tanks and all related equipment. They are primarily based out of Novato, Calif. in Marin County.

The Nature of the Plaintiff’s Accusations

The company stood accused by Manuel and the U.S. government of putting in claims against federal health care programs as far back as 2004 for home oxygen and equipment. The claims were allegedly made without getting prior physician approval.

The company was also accused by the plaintiffs in this healthcare fraud whistleblower case of allowing sales representatives to nurture a type of sales kickback arrangement as early as 2006.

Sales personnel would allegedly refer people to sleep disorder clinics, with the understanding that the clinics would then refer the same people back to them for supposedly needed equipment. Plaintiffs argued these actions were in violation of the Anti-Kickback Statute.

In 2012, the Federal Bureau of Investigation (FBI) raided several California offices of Pacific Pulmonary Services to gather the evidence they needed.

Pacific Pulmonary Agrees to Settle the Case

In late April 2017, Pacific Pulmonary Services decided to settle this healthcare fraud whistleblower case against them, but will not admit that they engaged in any illegal billing activities.

They agreed to pay $11.4 million in settlement costs.  Close to $2 million of this settlement will go to Manuel for bringing the supposed fraudulent activities to light.  This incentive award is provided for within U.S. False Claims Act provisions. The remainder will reimburse the U.S. government.

What is the False Claims Act?

The U.S. False Claims Act (FCA) is a federal law used as a tool against companies and individuals that attempt to defraud the government.

Typically, these defrauding entities are federal contractors that put claims against federal programs. This law allows people not affiliated with the government, also known as whistleblowers, to file whistlebower lawsuits on behalf of the government to draw attention to fraudulent activities.  Whistleblowers are rewarded in most cases with a maximum of 25% of the proceeds.

The U.S. Government has recovered close to $40 billion under the FCA between 1987 and 2013. Whistleblower lawsuits filed under this act often involve military contracts and healthcare spending programs like Medicare and Medicaid. A lot of the largest pharmaceutical settlements have involved violations.