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Whistleblower Gets $28 Million Reward in Diabetic Testing Scam

The U.S. Attorney’s Office in Nashville, Tennessee announced a call center employee will receive over $28 million for blowing the whistle on a mail order diabetic testing supply scheme. Prosecutors say that that Arriva Medical violated the False Claims Act by paying kickbacks to Medicare and Medicaid beneficiaries. Some of the patients who “qualified” for testing supplies weren’t even alive!

Whistleblower Gets $28 Million Reward in Diabetic Testing Scam

The case began in February 2013 when Gregory Goodman started working as a telephone sales rep for Arriva Medical. Arriva was a fast growing mail order medical supply business that sold glucose meters, test strips, lancets and other diabetic testing supplies.

It didn’t take long before Goodman realized that something wasn’t right. He says that Arriva was committing widespread healthcare fraud. Specifically, he said Arriva was:

  • fraudulently billing Medicare for thousands of glucose meters that were not medically necessary,
  • offering kickbacks to their customers―in the form of free, “upgraded” meters and forgiving copayments―to induce beneficiaries to obtain their diabetes testing supplies from Arriva and to further induce beneficiaries to order unnecessary products and services covered and partially paid for by Medicare,
  • offering kickbacks, in the form of forgiving copayments, to secondary insurance providers Express Scripts, Inc. (“ESI”) and United Healthcare (“United”) to induce those insurers to refer their Medicare-covered, diabetic patients to defendants to obtain diabetic testing supplies,
  • illegally marketing heating pads, back braces, and impotence therapy devices to new patients during calls to place orders for diabetic testing supplies, and then billing government healthcare programs for these illegally marketed items,
  • illegally billing Medicare for diabetic supplies without having the necessary prescriptions on file from beneficiaries’ physicians, and
  • illegally inducing beneficiaries to switch from one brand of diabetic testing supplies to another.

In his few short months as a sales rep, it became obvious that Arriva was defrauding Medicare. According to his complaint, Goodman said Arriva “instructed their sales associates to ‘up-sell’ beneficiaries on every phone call the associates made. Specifically, the sales associates were instructed to market heating pads, back braces and impotence therapy devices to every patient they spoke to, regardless of whether the patient had ever asked about these products.”

On August 1st, 2013 Gregory Goodman had seen enough and filed a formal whistleblower complaint in federal court.

On August 2nd, 2021, Arriva Medical and its parent company settled the government’s charges. Arriva agreed to pay a penalty of $160,000,000.00. Goodman is slated to receive a whistleblower reward of $28,548,749 as his share. In announcing the settlement, a Justice Department spokesperson said,

“Paying illegal inducements to Medicare beneficiaries in the form of free items and routine copayment waivers can result in overutilization and waste taxpayer funds. We will continue to protect the integrity of the Medicare program by pursuing fraudulent claims arising from violations of the Anti-Kickback Statute or other applicable reimbursement requirements.” 

Two of Arriva’s former executives previously agreed to each pay $500,000 apiece for their roles in the scheme. David Wallace of Boca Raton, Florida and Timothy Stocksdale, of Ft. Lauderdale, Florida settled in April 2019.

Whistleblower Rewards for Medicare and Medicaid Fraud

The case against Arriva involved mostly Medicare fraud. Both programs, however, pay cash rewards to whistleblowers with inside information about fraud. Under the federal False Claims Act, whistleblowers can receive between 15% and 30% of whatever the government receives from the wrongdoers.

The government says the False Claims Act is one of its most important and powerful tools in its battle against healthcare fraud. 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). To qualify for a whistleblower reward, however, you must have inside information and must file a complaint in court. Calling the government’s tips line does not get you a reward.

The Whistleblower Bar Association can help connect you with a qualified lawyer able to investigate your claim and file the necessary paperwork in court. More importantly, our lawyers have the experience to help you put an end to the illegal fraud and to maximize any reward for which you may be eligible. Our lawyers do not charge upfront fees or costs, in fact, you only pay if they are successful and you receive a reward.

Twenty nine states and the District of Columbia have their own state Medicaid reward programs that pay in addition to the federal government. This includes Tennessee where Arriva Medical was prosecuted. Often in cases where durable medical goods companies are operating nationally, we can help you collect rewards from many of the states as well.

To learn more, contact us for a no obligation, confidential consultation. Our lawyers can be reached online or by phone 888-742-7248.

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