The government recently entered into a settlement agreement with home oxygen and respiratory medications equipment and services company Braden Partners, L.P., doing business as Pacific Pulmonary Services (“PPS”), regarding a False Claims Act lawsuit that was filed against the company in 2010. The lawsuit alleges that the company engaged in government programs fraud by incentivizing physicians to conduct tests and prescribe sleep therapy and oxygen products to patients who utilize government health insurance programs such as Medicare, Medi-cal (California’s Medicaid program), and TRICARE, that were medically unnecessary. Under this scheme, PPS was able to submit false claims to the government for payment for the products and services that were gratuitously administered. PPS has agreed to settle the allegations for $11.4 million.

The company was founded in Bakersfield, California in 1978 and currently operates in over 16 states across the country. PPS supplies home oxygen therapy products to patients, as well as sleep therapy equipment and nebulized medications to treat respiratory conditions such as Chronic Obstructive Pulmonary Disease.

A central role within the company’s organizational structure is that of the Patient Care Coordinator (“PCC”). The purpose of this position is for the PCC to act as the liaison between the company, physicians, and other referral sources such as skilled nursing facilities and sleep centers/labs to market and sell PPS’s products and services. Within his initial Complaint, relator Manuel Alcaine, who was employed as a PCC with PPS from March 2009 through January 2010, alleges that the company incentivized PCCs through a generous sales commission plan to sell a certain number of products each month, with the threat of termination for underwhelming sales constantly looming over their heads. A PCC could rapidly increase their base salary by reaching certain quarterly sales goals and maintaining a minimum amount in reimbursements from government and private insurance plans.

Furthermore, the Complaint contends that PPS directly violated the Federal Anti-Kickback statute by engaging in a referral plan with medical facilities and physicians. During interactions with patients, PCCs would refer them to sleep clinics to receive tests. In exchange for providing the facilities with patients, physicians would prescribe PPS’s products and services to them. Additionally, the lawsuit alleges that the company falsified test results to qualify patients to receive home oxygen therapy that was medically unnecessary.