Company Submits False Claims to FEHBP, Ordered to Pay Over $34 Million

The U.S. Department of Justice (DOJ) announced on April 29th, 2022, a $34.37 million settlement in a case of Federal Employees Health Benefits Program (FEHBP) fraud where a hearing aid company made false FEHBP claims. In brief, the company allegedly submitted claims for hearing aid devices for reimbursement to the FEHBP. However, they contained unsupported hearing loss diagnosis codes. This investigation highlights the DOJ’s recent efforts to combat healthcare fraud across all industries. Meanwhile, the DOJ continues its enforcement in other areas, as well. Previously, the DOJ filed a statement of interest to stop non-compete agreements between a medical group and its employees.

Background of the Federal Employees Health Benefits Program

Administered by the U.S. Office of Personnel Management (OPM), the FEHBP is the largest employer-sponsored group health insurance program in the world. The FEHBP works through various carriers to provide health benefits to its plan participants. Specifically, the FEHBP covers more than eight million federal employees, retirees, former employees, family members, and former spouses. As Principal Deputy Assistant Attorney General Brian M. Boynton stated, “The FEHBP plays a vital role in ensuring the health and wellbeing of our nation’s dedicated civil servants and their families.”

Alleged False FEHBP Claims

Between January 1st, 2017, and January 31st, 2021, the California hearing aid company, Eargo Inc., included unsupported hearing loss-related diagnosis codes on false FEHBP claims for hearing aid devices. Some health insurance plans under the FEHBP may offer a hearing aid benefit. As a part of this benefit, FEHBP carriers require that the related claims include a hearing loss-related diagnosis code. In turn, these diagnosis codes must correspond with a legitimate hearing loss diagnosis. Typically, these diagnoses are based on a hearing test by the provider. As a part of Eargo Inc.’s false FEHBP claims, the company also included the unsupported diagnosis codes on invoices (also known as “superbills”) provided to beneficiaries. The purpose of this was to fraudulently obtain reimbursement for the hearing aids from the FEHBP. Furthermore, Eargo Inc. allegedly continued to include the unsupported diagnosis codes on claims and bills even after internal review of its practices in January 2021. This includes a period between February 1st, 2021, and September 22nd, 2021. In other words, Eargo Inc. knowingly submitted false FEHBP claims for reimbursement.

The False Claims Act

Many of the DOJ’s fraud cases are filed under the False Claims Act (FCA), or the “Lincoln Law.” The FCA is a federal statute enacted in 1863 in response to Civil War-era defense contractor fraud. Basically, the FCA stated that anyone who knowingly submitted false claims to the government was liable for double the damages. In addition, they would pay $2,000 for each false claim. Amended since then, the FCA now holds violators accountable for treble damages and penalties adjusted annually for inflation. In closing, Deputy Inspector General Norbert E. Vint of the OPM Office of the Inspector General stated, “Submitting unsupported claims to the FEHBP, knowingly and otherwise, harms the American taxpayer. I am incredibly grateful to our investigative staff and partners at the Department of Justice for their unwavering commitment to protecting the integrity of the FEHBP and preserving the trust fund for the health care of our nation’s dedicated civil servants.”