In The News

Pacific Pulmonary Services Pays $11.4 Million to Resolve False Claims Act Allegations

The prosecution of False Claims Act violations continues under the new administration as the Department of Justice announced late last month that Braden Partners, L.P., dba Pacific Pulmonary Services (PPS), would be paying $11.4 million to resolve False Claim Act violations for submitting claims to Medicare and other healthcare programs for oxygen equipment supplied in violation of program rules. PPS – along with its general partner Teijin Pharma USA LLC – is also alleged to have supplied sleep therapy equipment as part of a cross-referral kickback scheme with sleep clinics. “This settlement demonstrates our continued pursuit of health care providers who take advantage of federal healthcare programs,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will investigate and take action against providers who cut corners and pay kickbacks.”


PPS – which is based in California – furnishes stationary and portable oxygen tanks and related supplies as well as sleep equipment to patients’ homes in California and other states. The government alleged that beginning in 2004, PPS began submitting claims to Medicare, TRICARE and Federal Employee Health Benefits programs for home oxygen and oxygen equipment without first obtaining physician authorization. This approval is required per program rules. Beginning in 2006, some of the company’s patient care coordinators allegedly agreed to make patient referrals to sleep testing clinics in exchange for those clinics’ agreement to refer patients to PPS for sleep therapy equipment. The government alleged that this violated the Anti-Kickback Act ((42 U.S. Code § 1320a–7b). This act prohibits offering, paying, soliciting or receiving remuneration to include referrals of items or services covered by Medicare, Medicaid and/or other federally funded programs.


“The U.S. Attorney’s Office is committed to taking all appropriate action against companies that disregard patients’ medical needs in pursuit of company profits,” said U.S. Attorney Brian J. Stretch for the Northern District of California. “Patients in federal health care programs expect and deserve medical care that is free from any undue influence and complies with the program safeguards that are in place to protect patients.” The $11.4 million settlement resolves allegations that were filed in a lawsuit by a former sales representative (Manuel Alcaine) of PPS. The case was filed in federal court in San Francisco, California. Mr. Alcaine filed his suit under the qui tam, or whistleblower, provisions of the False Claims Act which permits individuals to sue institutions on behalf of the federal government for false claims and to share in any subsequent recovery. Mr. Alcaine will receive $1.824 million of the recovered funds.


Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to the Department of Health and Human Services, at 800-HHS-TIPS (800-447-8477). If you have chosen to disclose wrongdoing it is also advised that you contact a qui tam law firm. Qui tam law firms specialize in all areas related to the False Claims Act and will be able to advise you on such matters.