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Ammed Direct To Pay $18 Mln To US, Tennessee To Resolve False Claims Allegations

The United States Department of Justice announced that on Friday, AmMed Direct LLC has agreed to pay the United States and the state of Tennessee $18 million plus interest to settle allegations that it submitted false claims to Medicare and Tennessee Medicaid.

As per the agreement, AmMed will pay $17,560,997 to the United States and $439,003 to Tennessee.

The United States and Tennessee alleged that, from September 2008 through January 2010, the Antioch, Tenn.-based company submitted false claims to Medicare and TennCare for diabetes testing supplies, vacuum erection devices and heating pads.

The United States and Tennessee asserted that AmMed widely advertised free cookbooks in order to induce Medicare beneficiaries to contact AmMed or its hired telemarketing firm. Once AmMed confirmed that a beneficiary was covered by Medicare, AmMed representatives improperly attempted to sell the beneficiary supplies that would be paid for by Medicare. Medicare rules prohibit medical businesses from making unsolicited telephone contact with beneficiaries to sell them their products, unless specific exceptions apply.

The United States and Tennessee also alleged that, as a result of AmMed's improper marketing, many Medicare beneficiaries who called AmMed to receive the advertised free cookbooks returned their diabetic supplies to AmMed. AmMed, however, failed to timely refund the money to Medicare or TennCare. Rather, AmMed allowed the unpaid refunds to accrue from September 2006 until January 2010.

Prior to learning of the United States' and Tennessee's investigation, AmMed disclosed to the Medicare Administrative Contractors its failure to refund monies for returned supplies and began paying the refunds to Medicare and TennCare.

The Justice Department said that the allegations arose from a lawsuit brought under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens with knowledge of false claims against the government to bring an action on behalf of the United States and to share in any recovery.

The qui tam action was filed in 2009 in federal district court in Nashville, Tenn., by former AmMed Direct employee Bryan McNeese. The relator will receive approximately $2.88 million as his share of the settlement proceeds, the Justice Department said.

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