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Rehabilicare settles Medicare whistleblower lawsuit for $1.6 million

Rehabilicare Inc. has announced an agreement with the U.S. government to settle allegations by a former employee that it improperly billed Medicare on 500,000 claims that resulted in overpayments to the company totaling more than $120 million.

Rehabilicare, a New Brighton, Minn. pain-management company, has denied charges that it fraudulently billed Medicare. However, the company says it has agreed to pay a total of $1.59 million to end the lawsuit which was originally filed by Elizabeth Mies on Dec. 31, 1998 in the U.S. District Court of the Middle District Court of Florida. The U.S. government intervened as co-plaintiff in the case on Nov. 8, 1999.

The U.S. Justice department is aware of Rehabilicare's press release announcing an agreement, says Steve Cole, a spokesperson for the U.S. Attorney General's office in Tampa, Fla. However, he adds that a final agreement has not been officially signed and would not comment further. The suit was filed under the Civil False Claims Act, also known as the "whistleblower act." It charges that Rehabilicare submitted claims to the government on the basis of certificates of medical necessity faxed from physicians, instead of requiring signed originals, and that the company overbilled for products contained in a standard Medicare kit.

"This suit has been a distraction to management, our sales force, and the rest of the Rehabilicare team for the past seven months, and we are glad to bring it to a close," says David Kaysen, Rehabilicare's president and chief executive officer. "We have worked diligently with the United States government to resolve these billing issues and have now come to an agreement with which all parties are satisfied."

As part of the settlement, Rehabilicare must enter into a five-year Corporate Integrity Agreement (CIA) which calls for an independent audit of claims submitted to federal health care programs to ensure the proper filing of future Medicare claims.

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