Company settles false claims case Firm accused of billing Medicare high prices for cheap equipment


A Frederick company accused of billing Medicare for more than 200 top-of-the-line "lymphodema pumps" while providing patients with equipment that was merely adequate has agreed to pay the U.S. government a $1.5 million settlement in the false claims suit.

The case against National Medical Systems, owned by Charles K. Goldschein of the 5300 block of Summerwood Court in Frederick was brought to the government's attention in 1993 by a sales representative in the health care industry.

In visits to nursing homes and hospitals around the country, the anonymous whistle-blower began seeing a proliferation of pumps used to treat swelling in the extremities caused by lymph fluid buildup. The pumps look something like a blood pressure gauge. The cheap ones -- provided by National Medical Systems -- cost between $600 and $1,000. Sophisticated models, for which the firm was billing Medicare, cost about $4,000.

In the settlement, which is secured by four pieces of real estate owned by Mr. Goldschein, including his personal residence, National Medical Systems disputes all allegations. The $1.5 million figure is about equal to overbilling charged for pumps distributed around the country between November 1992 and December 1993.

"I've looked at both pumps and I can't tell the difference, maybe a health care specialist could," said Laurie A. Miller, a Washington attorney for National Medical Systems.

Ms. Miller said the manufacturer of the pump -- Huntleigh Technologies of Great Britain -- shipped the equipment as top-of-the-line pumps. Mr. Goldschein's firm, she said, simply billed Medicare for pumps it believed to be worth the higher amount.

She termed it a "technical issue" and would not go so far as to say her client had made an honest mistake.

"We were informed by manufacturer that they were [superior] pumps. Given the data the government subsequently got, there was something to be said for the argument that they may not have been," Ms. Miller said. "Huntleigh Technologies has already reached a settlement with the government. We settled because if this had dragged on, it would have been two or three years finding out who was at fault. That makes it difficult to continue to do business."

The suspicion of fraud was initially made to Public Integrity Inc., an internal policing group of the medical equipment manufacturing industry. Public Integrity takes confidential information from industry insiders, does its own investigation, and then decides whether to bring suit.

Said Steve Simms, a Baltimore attorney who represented Public Integrity: "From our standpoint, the liability was very clear. They were charging common pumps against codes for the expensive pumps."

Under the United States False Claims Act, Public Integrity will receive $225,000 of the settlement, to be used to investigate future claims of fraud against the government.

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