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MEDICAL EQUIPMENT COMPANY WILL PAY U.S. $7 MILLION

WASHINGTON, D.C. -- American HomePatient, Inc. and its affiliate, American HomePatient Delaware (collectively, AHOM), providers of medical equipment and supplies, will pay the United States $7 million to settle allegations that the Brentwood, Tennessee-based company violated the False Claims Act, the Justice Department announced today. The settlement resolves allegations that AHOM submitted claims for payment based on inadequate supporting documentation or stemming from illegal patient referrals to several federal programs.

The United States alleged that AHOM submitted claims that items and services provided to patients were medically necessary, duly ordered by the patients' physicians and properly delivered on the dates specified by the company and its affiliate when, in fact, the documents were either falsified or otherwise inadequate to support the services billed to the U.S. In addition, it was alleged that AHOM billed the government for items and services furnished to patients when, in fact, the patients were referred to AHOM in exchange for illegal remuneration.

The settlement agreement further alleges excessive billings by AHOM during the period from January 1, 1995 through December 31, 1998. The United States alleged that three federally-funded programs - Medicare, Medicaid and TRICARE, the military health care program - were overcharged by the defendants' unlawful practices.

"Today's settlement is an example of the Justice Department's determination to ensure that the United States is compensated for all False Claims Act violations involving health care equipment suppliers," said Stuart Schiffer, Acting Assistant Attorney General for the Civil Division. Steven Reed, United States Attorney in Louisville, said that he was pleased with the extensive investigative efforts which made this settlement possible.

The settlement resolves charges brought against AHOM by Kenneth Hollis, a former employee. As part of the settlement, Mr. Hollis will receive $1.17 million. Under the qui tam or whistleblower provisions of the False Claims Act, an individual can file an action on behalf of the United States and receive a portion of the settlement if the government takes over the case and reaches a monetary agreement with the defendants. Mr. Hollis filed his suit in 1997 in U.S. District Court in Bowling Green, Kentucky.

The case was investigated by the Lexington, Kentucky office of the Department of Health and Human Services' Office of the Inspector General; the Dayton, Ohio office of the Defense Criminal Investigative Service; and the four Durable Medical Equipment Regional Carriers. The regional carriers have been designated by the Health Care Financing Administration (HCFA) and the Department of Health and Human Services to perform all of the duties associated with processing claims for durable medical equipment, prosthetics, orthotics and supplies under the Medicare program.

The settlement was negotiated by the Justice Department's Civil Division and the United States Attorney's Office for the Western District of Kentucky.

The case is entitled US ex rel. Hollis v. American HomePatient, Inc., American HomePatient, Inc. Delaware, and Jesse & Jesse Enterprises, Inc. d/b/a/ Pro-Mec, Civil No. 1:97CV-157R (W.D.-KY)

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