The Department of Justice settled a qui tam whistleblower lawsuit with THD America Inc. along with its parent company, THD SpA of Italy. The medical device manufacturer will pay $700,000 for an alleged incorrect billing code scheme which caused Medicare and State Medicaid programs to pay false claims. The whistleblower, a former employee of the medical device manufacturer, will receive $115,500 or 16.5% of the settlement.

Details of the Allegations

One of the products THD manufactures is the Slide One Kit, used to treat hemorrhoids. Between 2014 and 2017, physicians using the Kit had to bill under a temporary code, known as a “T-Code,” which is assigned to new or experimental medical services, and because of their experimental status, providers frequently received denials for these claims. THD’s workaround suggestion to providers using the Kit was to indicate the T-code in combination with a Current Procedural Terminology (CPT) code or to use CPT code(s) instead of the T-code.

Upcoding Fraud

Upcoding occurs when a healthcare provider or organization bills for a medical service using a more expensive code than the one that accurately reflects the service provided. Many medical treatments and supplies are billed to programs like Medicare, Medicaid, TRICARE, the VA, or FEHB using specific codes, often based on the Current Procedural Terminology (CPT) system. Since this system depends on the provider’s accuracy, it opens the door for fraudulent practices by dishonest professionals seeking higher reimbursements. In this case, the medical device manufacturer allegedly violated the False Claims Act by telling providers to improperly code their procedures.

Whistleblower Provisions and Rewards

The settlement consists of $598,121.23 to the federal government, of which $456,720.26 is restitution, and $101,878.77 to several states for submitting false claims to their Medicaid programs. As the Principal Deputy Assistant Attorney General said about the case, “The integrity of federal healthcare programs depends upon compliance with coding and billing rules that are used to make coverage and reimbursement decisions.” Thanks to the qui tam provision of the False Claims Act, the whistleblower reported this upcoding scheme and will share in the government’s recovery.

Implications for Healthcare Professionals

This settlement serves as a critical reminder for healthcare professionals about the importance of compliance with coding and billing regulations, and of the False Claims Act as the government’s main form of recourse for fraud. “Accurately billing for services provided to Medicare and Medicaid enrollees is required of all health care companies,” remarked the Special Agent in Charge of the Department of Health and Human Services Office of the Inspector General. Industry insiders, who observe their employer inducing healthcare providers to “creatively” bill government healthcare programs, are empowered by the False Claims Act to share their concerns with a qui tam attorney.