Virginia Medical Equipment Provider Ordered to Pay $12 M in Medicare Fraud Scheme as Civil Penalty

ALEXANDRIA, Va. – AZ Diabetic Supply, Inc. (AZD), a durable medical equipment (DME) provider located in Vienna, was ordered to pay $12 million for its submission of nearly 1,000 false and fraudulent claims to Medicare for reimbursement.

AZD is owned and operated by Hisham Zaghal, a resident of Vienna. In its complaint filed in district court, the United States alleged that from January 2016 through December 2021, Medicare paid AZD over $600,000 in reimbursement claims for medical braces provided to Medicare-enrolled patients related to DME prescriptions that AZD illegally purchased from marketing companies. AZD, through Zaghal, paid a fee for each prescription that it purchased. AZD used the DME prescriptions and personal and medical data provided by the marketing companies to submit 923 fraudulent Medicare claims for reimbursement. The District Court for the Eastern District of Virginia held AZD liable for its actions and entered a judgment against the company for damages and penalties under the False Claims Act for $12,036,554.48.

Zaghal reached a separate settlement agreement with the United States for his alleged role in the scheme. As part of that agreement, Zaghal agreed to pay $10,000 and accept a three-year voluntary exclusion from federally funded healthcare programs. He also agreed to forgo $57,690.12 funds in escrow held by the Department of Health & Human Services (HHS) from the nationwide suspension of payments to AZD and Zaghal. The claims against Zaghal resolved by the settlement are allegations only and there has been no determination of lability.

The resolutions obtained in this matter were the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Virginia and the U.S. Department of Health & Human Services Office of Inspector General.

The matter was handled by Assistant U.S. Attorney Kristin Starr and former Assistant U.S. Attorney Krista Anderson.

A copy of this press release may be found on the website at http://www.justice.gov/usao/vae. Related court documents and information from the civil lawsuit can be accessed on PACER by searching for No. 1:22-cv-965.