Dirty diapers: DOJ cracks down on DME fraud

The U.S. Department of Justice continues to rack up huge settlements against durable medical equipment (DME) companies that falsely bill Medicare for adult geriatric diapers.

Last month, the U.S. Attorney's office in the Southern District of Ohio successfully prosecuted Marvin D. Thomas, president of USA Medical Systems Inc. of Cleves, OH, for felony mail fraud and false claims violations.

Thomas pled guilty to defrauding Medicare of at least $2 million over the last three years by supplying more than 300,000 disposable adult diapers to elderly patients, then billing Medicare for what he misrepresented as "female external urinary collection pouches."

Medicare will not pay for adult diapers or bed pads because "they are not medically necessary. They're just personal comfort items," says Seth Uram, assistant U.S. Attorney for the Northern District of Ohio.

USA Medical could face a fine of up to $4 million and five years probation from Medicare. Thomas also faces up to a $4 million fine, as well as up to 10 years in prison. As part of a plea agreement, Thomas has already agreed to forfeit the $2 million obtained by fraud from Medicare.

In a separate case, also in Ohio, the U.S. Attorney's Office has filed charges against Sharon A. Cassity and Holly Reinke, former management employees of Harris Medical Supply Inc. of Toledo, for allegedly defrauding Medicare of at least $8,435,000.

The DOJ claims that the two falsely billed Medicare for covered medical devices supplied to nursing homes when they actually supplied noncovered adult diapers. If found guilty, the pair faces a potential fine of twice the loss to the federal Medicare program-or about $17 million, as well as up to five years in prison, Uram says.

Investigating agencies in the case include the HHS Office of the Inspector General's Criminal Investigation Division and the U.S. Postal Service.

The Postal Service's involvement stems from the fact that some of Harris MedicalSupply's allegedly false billings to Medicare were submitted by mail, Uram says.