National contract supplier to pay $12M settlement

NEWARK, N.J. - U.S. Healthcare Supply, a national contract supplier for mail-order diabetes supplies, and two of its executives have agreed to pay the government more than $12.2 million to resolve allegations that they violated the False Claims Act.

The settlement resolves allegations that U.S. Healthcare Supply and Oxford Diabetic Supply, both based in Milford, N.J., set up and controlled a fictitious entity to make unsolicited telephone calls to Medicare beneficiaries to sell them DME. The companies then allegedly submitted claims for the equipment to Medicare in violation of the Medicare Anti-Solicitation statute.

“Cold-calling people to sell them expensive medical equipment is prohibited for a reason: unsuspecting patients shouldn't be coerced into making medical decisions about devices and equipment—which they may not even need—on the basis of a sales pitch,” said Paul Fishman, U.S. Attorney of the District of New Jersey, in a release.

U.S. Healthcare Supply has agreed to pay $5 million plus interest; Jon Letko, its owner and president, has agreed to pay $1 million plus interest. John Letko's brother, Edward Letko, owner and president of Oxford Diabetic Supply, has agreed to pay $6 million plus interest.

This isn't the first time CMS has run into trouble with diabetes suppliers. Arriva, the largest of only nine providers to be awarded mail-order diabetes contracts in the latest round of competitive bidding, was rumored to have its provider number revoked by the National Supplier Clearinghouse, underscoring the dangers of having so few providers covering such a large market. On July 21, the company said the matter had been take care of.