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US Government Intervenes in Qui Tam Lawsuit

The Justice Department announced that the United States has intervened in two whistleblowers’ qui tam lawsuit alleging that a durable medical equipment supplier, Orbit Medical Enterprises, Inc. (“Orbit Medical”) and its former vice president and sales manager, Jake Kilgore, violated the False Claims Act.

According to its website, Orbit Medical based in Salt Lake City, Utah, specializes in the distribution of durable medical equipment such as power wheelchairs, mobility aids like canes and walkers, in-home oxygen tanks, and other home medical equipment. In 2010, two former employees of Orbit Medical filed a qui tam lawsuit in the United States District Court for the District of Utah alleging that Orbit Medical and Kilgore increased the company’s power wheelchair sales by falsifying physician prescriptions and supporting documentation.

Medicare Part B covers durable medical equipment such as power-operated wheelchairs. In order to be eligible for Medicare coverage, a physician must perform a face-to-face examination of the Medicare beneficiary and provide a written prescription for the power wheelchair.

According to the whistleblowers’ qui tam suit, Kilgore directed Orbit Medical’s sales representatives to knowingly alter physician prescriptions and supporting paperwork so that its power wheelchair claims would be covered and paid for by federal health care programs such as Medicare, the Federal Employees Health Benefits Plan, and the Defense Health Agency. The government contends that Orbit’s submissions to federal government programs were false claims in violation of the False Claims Act. Specifically, the whistleblowers allege that Orbit staff created documents purporting to falsely certify that physicians examined patients in person, altered prescriptions to falsely show medical necessity for power wheelchairs, and forged physicians’ signatures on prescriptions.

In October 2013, a federal grand jury in Utah indicted Kilgore for health care and wire fraud related to his time at Orbit Medical. According the Federal Bureau of Investigation, the scheme allegedly resulted in the payment of more than $15 million by Medicare to Orbit.

If the government is ultimately successful in its claims against Orbit Medical, or if the case is settled, the whistleblowers, Dustin Clyde and Tyler Kackson, may be entitled to receive a percentage of any recovery under the qui tam provisions of the False Claims Act.

To read more about healthcare fraud, click here.

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