Seven former Osteo Relief Institute clinics accused of billing Medicare for unnecessary knee braces and injections to treat osteoarthritis have agreed to pay more than $7.1 million in a settlement, the U.S. Justice Department announced Friday.

“Billing Medicare for medically unnecessary items and procedures puts patients at risk and wastes taxpayer funds,” Assistant Attorney General Jody Hunt of the Civil Division said in a statement. “Today’s settlement demonstrates that the Department of Justice will pursue companies and individuals who seek to benefit at the expense of federal health care programs and their beneficiaries.”

“Billing Medicare for medically unnecessary items and procedures puts patients at risk and wastes taxpayer funds.”
— Jody Hunt, Justice Department civil division

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The settlement concludes a probe of clinics in six states that performed administered viscosupplementation injections -- where doctors inject a gel-like substance into a patient's knee joint to prevent symptoms associated with arthritis -- to patients who did not need them and filed false claims to Medicare for the treatments. The government also said owners of these clinics used multiple brands of the injection successively on patients without clinical support and purchased reimported forms of the drug from foreign countries. In addition, the clinics provided patients with unnecessary custom knee braces.

The investigation originated in Lexington, Ky., after a whistleblower filed a lawsuit prompting a review of Medicare claims data.

The whistleblower is set to receive $857,550 from the government.

Six ORI clinics -- in Phoenix; San Diego; Lexington, Ky.; Wall Township, N.J.; Dallas and San Antonio -- will collectively pay the government $6 million. A seventh clinic, in Colorado Springs, Colo., will pay approximately $1.13 million.

“This settlement demonstrates that the U.S. Attorney’s Office will continue to identify and hold accountable those healthcare providers who improperly bill medically unnecessary services,” Robert Duncan Jr., U.S. Attorney for the Eastern District of Kentucky said in a statement. “It is also an example of our commitment to identify those who seek to defraud the government, as well as to work with whistleblowers, who play a critical role in helping keep entities honest, and are encouraged to report suspected waste, fraud, and abuse by those billing federal programs.”

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As part of the settlement, the clinics also agreed to implement new compliance controls and will be subjected to annual ORI clinics claims reviews by an independent review organization.