Medicare Fraud Enforcement: Two Major Settlements Totaling $25.9M Highlight Need for Strict Compliance Oversight

Healthcare providers across the U.S. have just learned a hard lesson about accountability, with two high-profile cases settling for a combined $25.9 million. The Department of Justice’s latest actions spotlight fraudulent billing practices that took advantage of Medicare, the government program designed to help the nation’s elderly and vulnerable. In one case, a pharmacy found itself caught up in the scam of submitting false claims for COVID-19 tests it never shipped. In the other, a network of cardiology practices saw a significant financial hit after overbilling Medicare for diagnostic drugs, some for over a decade.

First up, Rapid Health, a pharmacy based in Los Angeles, is paying $8.2 million to settle accusations it submitted false claims to Medicare for over-the-counter (OTC) COVID-19 tests that never actually made it into the hands of patients. Between April 2022 and May 2023, Rapid Health participated in the Centers for Medicare & Medicaid Services (CMS) OTC COVID-19 Test Demonstration Project. This program allowed Medicare beneficiaries to order up to eight OTC tests per month, with Medicare reimbursing providers a fixed rate of $12 per test.

But the issue? Rapid Health was billing Medicare for tests they never sent out. According to the U.S. government, despite knowing about internal issues that caused the company to not ship tests after processing orders, Rapid Health continued submitting claims for tests it hadn’t delivered.

Principal Deputy Assistant Attorney General Brian M. Boynton put it plainly: “Providers that knowingly billed for tests that were never given to patients failed to support the goals of the project and defrauded the American taxpayers.”

HHS-OIG Special Agent in Charge Maureen Dixon added, “This outcome serves as a reminder of our unwavering commitment to combat health care fraud and investigate those who attempt to exploit and defraud Medicare.”

It’s clear from both statements that these actions aren’t just about money—they’re about holding healthcare providers to higher standards, particularly when it comes to programs meant to serve vulnerable populations during a public health emergency.

Sixteen Cardiology Practices & the Long Game of Overbilling

The second case centers on 16 cardiology practices spread across 12 states, each agreeing to pay a combined $17.7 million to settle allegations of overbilling Medicare for diagnostic radiopharmaceuticals, drugs used in medical imaging for heart disease and certain cancers. For over a decade in some cases, these practices reportedly inflated the costs they reported to Medicare for these drugs, resulting in overpaid reimbursements.

These payments, which were based on the acquisition costs of the drugs, were allegedly manipulated by the providers to increase the amount they received from Medicare. U.S. Attorney Matthew M. Graves for the District of Columbia was quick to emphasize the role of accurate billing in maintaining the financial health of federal programs: “Practices and providers who overcharge the government and fail to return overpayments compromise our healthcare programs.”

One of the things that stands out in this case is the sheer number of practices involved—and the long timeline. Some providers were overbilling for years, stretching back more than a decade in some instances. This isn’t just a one-time mistake; this is a pattern that, as the government sees it, requires a serious response.

As U.S. Attorney Michael A. Bennett for the Western District of Kentucky put it, “These practitioners overbilled the Medicare program by grossly exaggerating the acquisition costs of drugs used in diagnostic imaging of the heart.” The message here is clear: when it comes to Medicare, honesty isn’t just the best policy—it’s the only policy.

Whistleblowers Get Their Due

Interestingly, this second case also shines a light on the importance of whistleblowers in exposing fraudulent activity. The civil settlement comes after whistleblowers Jasjit Walia and Preet Randhawa stepped forward, helping the U.S. government uncover the fraudulent practices. As part of the settlement, these brave individuals will be receiving a combined $2.7 million.

This is a reminder that the fight against fraud isn’t just left to government agencies—it’s often the courage of insiders willing to speak out that makes all the difference.

At the heart of both of these settlements is the same message - compliance matters. Whether you’re dealing with a large pharmacy chain or a network of cardiology practices, the standards for Medicare billing are strict, and failing to meet them can have serious consequences. The settlements not only highlight the financial costs of noncompliance but also the broader impacts on healthcare programs that so many depend on.

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