Pacific Pulmonary settles whistleblower lawsuit

NOVATO, Calif. - Pacific Pulmonary Services has agreed to pay $11.4 million to resolve allegations that it participated in a kickback scheme for home oxygen and sleep therapy equipment.

The company admits to no wrongdoing.

The government alleges that in 2004, Pacific Pulmonary began submitting claims to Medicare, Tricare and Federal Employee Health Benefit programs for home oxygen equipment without first obtaining a doctor's order.

In 2006, certain patient care coordinators are alleged to have made patient referrals to sleep testing clinics in exchange for CPAP referrals, in violation of the Anti-Kickback Act.

“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 Stretch, in a press release. “Patients in federal healthcare 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.”

In early 2012, FBI agents raided several California offices of Pacific Pulmonary, including Bakersfield, where the provider has a centralized sleep therapy center, and billing and reimbursement offices.

Manuel Alcaine, a former sales representative at the company, in 2010 filed the whistleblower lawsuit against Pacific Pulmonary in 2010 in the U.S. District Court of Northern California. He will receive $1.825 million of the recovered funds.

Pacific Pulmonary was founded as Med-Mart in 1978. It was acquired in 1993 by Braden Partners and in 1996 it was renamed Pacific Pulmonary Services when it refocused on respiratory services. In 2008, Tokyo-based respiratory giant Teijin acquired Pacific Pulmonary Services and it currently serves patients in 16 states, according to its website.