No Whistleblower: Hearing Aid Company Settles Allegations of FEHBP Fraud for $34.37 Million
The United States Department of Justice settled a case against hearing aid distributor Eargo Inc. (Eargo) for allegedly submitting false claims to the Federal Employees Health Benefits Program (FEHBP). Under the terms of the settlement, the medical device distributor paid $34.37 million. There was no whistleblower in this False Claims Act case, as it arose from cooperation between the U.S. Office of Personnel Management – Office of the Inspector General (OPM-OIG), Civil Division, Commercial Litigation Branch, Fraud Section of the DOJ, and the U.S. Attorney’s Office for the Northern District of Texas. A whistleblower could have reported this fraud against the government and they would have been entitled to receive 15-25% of the government’s recovery.
In order to be eligible for a hearing aid under FEHBP, a patient needs to have received a hearing loss diagnosis, which would be coded accordingly on their claims to the health insurance carriers that administer FEHBP. According to the allegations, Eargo submitted claims to FEHBP for their devices with unsupported diagnoses for hearing loss over a period of four years. For the last seven months of that period, an internal audit revealed Eargo allegedly was aware of its practice of submitting claims with unsupported diagnoses and yet continued to do so. Knowing submission of improper claims for payment to a government program is a further violation of the False Claims Act. The scale of this fraud is massive because the FEHBP is “the largest employer-sponsored group health insurance program in the world.”
Civil servants and their families obtain health insurance through FEHBP. As the U.S. Attorney for the Northern District of Texas said about this fraud scheme, “Billing the program for medical devices patients may not need raises costs across the board,” costs which are then passed on to taxpayers funding the program. The Department of Justice needs whistleblowers to report fraudulent billing for medical devices.