Hearing Aid Company Eargo Inc. Agrees to Pay $34.37 Million to Settle Common Law and False Claims Act Allegations for Unsupported Diagnostic Codes | Takeover bid

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Eargo Inc. (Eargo), a California-based public for-profit company that sells and distributes hearing aids directly to customers nationwide, has agreed to pay $34.37 million to resolve the allegations it submitted or caused hearing aid claims to be submitted for reimbursement to the Federal Employees Health Benefits Program (FEHBP) that contained unsupported hearing loss diagnosis codes.

FEHBP, administered by the United States Office of Personnel Management (OPM), is the largest employer-sponsored group health insurance program in the world. It provides health benefits through various health insurance companies and covers more than eight million federal employees, retirees, former employees, family members and former spouses. Some FEHBP health insurance plans choose to offer a hearing aid benefit, which varies from plan to plan. FEHBP carriers that provide hearing aid benefit require claims for hearing aids to include a diagnosis code related to the hearing loss. These diagnostic codes must be supported by a diagnosis of hearing loss, which is usually based on a hearing test performed by a health care provider.

“FEHBP plays a vital role in ensuring the health and well-being of our country’s dedicated public servants and their families,” said Senior Assistant Deputy Attorney General Brian M. Boynton, Chief of the Civil Division of the Department of Justice. “The Department of Justice is committed to the integrity of this program and will pursue appropriate remedies against providers who abuse it.”

“Officials rely on FEHBP to keep their families healthy,” said U.S. Attorney Chad E. Meacham for the Northern District of Texas. “Charging the program for medical devices that patients may not need increases costs across the board. We are proud to hold Eargo accountable for its alleged use of unsupported diagnostic codes.

“Submitting unsubstantiated claims to FEHBP, knowingly and otherwise, harms the American taxpayer,” said Assistant Inspector General Norbert E. Vint of the OPM Office of Inspector General (OPM-OIG). “I am extremely grateful to our investigative staff and our partners in the Department of Justice for their unwavering commitment to protecting the integrity of the FEHBP and preserving the healthcare trust fund for the dedicated public servants of our country.”

The United States alleged that, from January 1, 2017 to January 31, 2021, Eargo included unsupported hearing loss-related diagnostic codes on hearing aid claims that Eargo submitted to the FEHBP and on invoices – called superbills – that Eargo to FEHBP recipients to obtain reimbursement for these devices from the FEHBP. The United States further alleged that between February 1, 2021 and September 22, 2021, Eargo continued to include these unsupported hearing loss-related diagnostic codes on claims and superbills – even after having completed an internal review of its billing and coding practices in January 2021 – resulting in Eargo knowingly submitting or causing the submission of false payment requests to FEHBP.

The resolution achieved in this case is the result of a coordinated effort between the Department of Justice’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of Texas, with the assistance from the OPM-OIG.

The investigation and resolution of this case illustrates the government’s focus on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources regarding potential fraud, waste, abuse, and mismanagement may be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The case was handled by Fraud Section Attorney Samuel Lehman and Assistant U.S. Attorney Kenneth Coffin for the Northern District of Texas.

The claims settled by this agreement are allegations only and no liability has been determined.

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