Oxygen tank supplier to pay $11.4 million settlement

A major supplier of home oxygen equipment has agreed to pay $11.4 million to settle accusations that it profiteered by filing false reimbursement claims with the government and arranging kickbacks with sleeptesting clinics, federal officials said Tuesday.

Justice Department and health care officials announced the settlement with Pacific Pulmonary Services, which is based in Novato and has more than 100 outlets in 20 states. Sixteen percent of the settlement, or $1.824 million, will be paid to Manuel Alcaine, a former Pacific Pulmonary sales representative in San Leandro. He sued the company in 2010 under a law that allows private citizens who expose fraud against the government to share in the recovery.

Pacific Pulmonary sells oxygen tanks and sleep therapy equipment. The government alleged that the company submitted reimbursement claims to Medicare and other federal programs, starting in 2004, without a physician’s approval as required by law.

Alcaine, an employee from March 2009 to January 2010, said in his lawsuit that Pacific Pulmonary would first arrange the delivery of its products and would then find ways to obtain a doctor’s signature.

In the alleged kickback scheme, the suit said Pacific Pulmonary referred patients to sleeptesting clinics, mostly in the East Bay, in exchange for the clinics’ agreement to refer those patients to the company for sleeptherapy equipment that was billed to the government.

“Home oxygen equipment and related supplies are some of the most fraudulently billed items of durable medical equipment,” Steven Ryan, head of the inspector general’s office at the U.S. Department of Health and Human Services, said in a statement. “Medicare suppliers more concerned with profits than with competence will be met with investigation and enforcement.”

Barbara Giuffre, a lawyer for Alcaine, said he was “one person who made a difference, and I am very proud of him.”

The company said that although Pacific Pulmonary “continues to strongly deny any allegations of wrongdoing, we fully cooperated with the government’s investigation. We are pleased to have reached an agreement with the government and put this matter behind us.”

The settlement contains no admission of wrongdoing.