Medical Device Company Pays Over $550K to Resolve False Claims Act Allegations Involving Altered Patient Records

The Department of Justice (DOJ) has announced that medical device manufacturer Tactile Systems Technology, Inc. has agreed to pay over $550,000 to resolve allegations that it submitted false claims to Medicare for medically unnecessary pneumatic compression devices. The settlement involves allegations that certain company sales representatives fabricated or altered medical records, forged health care professionals’ signatures, and added documentation intended to establish Medicare coverage for the devices.

Tactile markets pneumatic compression devices used to treat chronic swelling associated with lymphedema and chronic venous insufficiency. The company’s products include the Entre, a basic pneumatic compression device, and the Flexitouch, a more expensive advanced device designed to address swelling in the torso, head, neck, and extremities.

Medicare generally covers these devices only after a patient has undergone at least four weeks of conservative treatment, including basic compression therapy, without adequate improvement. The prescribing health care professional must document the conservative treatment and explain why it did not adequately address the patient’s condition.

According to the government, certain Tactile sales representatives manipulated that documentation to make patients appear eligible for Medicare-covered devices.

Alleged Alteration of Clinical Documentation

The government also contended that certain Tactile sales personnel fabricated or amended medical records and other clinical documentation collected to support Medicare claims. Specifically, the DOJ alleges that certain sales representatives inserted false statements indicating that patients had failed conservative compression therapy. Some representatives also allegedly forged health care professionals’ signatures on altered records to make it appear that the professionals had prescribed the Entre or Flexitouch devices.

The government also alleged that sales personnel altered documentation to support use of the more expensive Flexitouch device. In those instances, records were allegedly changed to state that a patient had not experienced sufficient improvement while using the Entre and would benefit from the advanced device. Tactile then submitted Medicare claims for devices the government characterized as medically unnecessary.

The case highlights the risks that arise when sales personnel are involved in collecting, preparing, or transmitting clinical documentation used to establish Medicare coverage. Although manufacturers and suppliers may assist providers with administrative aspects of the ordering process, the medical record must accurately reflect the treating professional’s independent assessment of the patient’s condition, treatment history, and medical needs.

Compliance Response and Cooperation Credit

The settlement agreement also describes actions Tactile took after its compliance department identified potential misconduct. The company investigated the conduct, disciplined or terminated certain sales personnel, and voluntarily repaid Medicare for claims it determined involved medically unnecessary devices.

Tactile also received credit under DOJ’s guidelines for disclosure, cooperation, and remediation in False Claims Act matters. According to the settlement agreement, the company assisted with the government’s damages analysis and accepted responsibility for the misconduct.

Notably, as part of the settlement, Tactile admitted and accepted responsibility for specified conduct.

Two Whistleblower Actions Led to the Settlement

The matter arose from two lawsuits filed under the FCA’s qui tam provisions. The relators will receive approximately nearly $130,000 from the settlement proceeds.

GWB represents healthcare providers in connection with government investigations and False Claims Act litigation. If you need assistance with such a matter, contact us today.