Earlier this year, Foot Care Store, Inc. d/b/a Dia-Foot reached a $5,538,338 settlement with the Department of Justice (DOJ) over allegations that the company sold “custom diabetic shoe inserts” that were not actually custom-made under Medicare standards.
Allegations
The allegations were initially brought under the qui tam provisions of the False Claims Act by a former Dia-Foot employee. The United States government alleged that from 2013 to 2018, Dia-Foot sold diabetic shoe inserts to customers throughout the country. The shoe inserts were often purported to be custom-made for the individual patient’s foot, when in reality, they were made using generic foot models. The inserts were purchased by diabetic patients who had a prescription from a health care provider and believed they were receiving a custom-made product.
Despite using generic foot models, Dia-Foot billed Medicare and Medicaid for a custom-made shoe. Dia-Foot also occasionally sold their inserts to providers who billed Medicare and Medicaid for custom inserts. This scheme allowed Dia-Foot to produce and sell more inserts, thereby increasing profits, by cutting corners on its production.
The government alleged that Dia-Foot went a step further, too, by advertising to customers that it was Medicare-compliant and had received Medicare approval for the custom diabetic shoe inserts. However, the government notes that Dia-Foot received Medicare approvals based on false information.
As is often the case, there was no determination of liability included in the settlement agreement.
Integrity Agreement
In addition to the monetary settlement, Dia-Foot and its CEO Robert Gaynor entered into a three-year integrity agreement with the United States Department of Health and Human Services Office of Inspector General (HHS OIG). Under the integrity agreement, Dia-Foot will need to implement updated policies and procedures as part of its compliance program and hire an Independent Review Organization to review its quarterly claims submitted to Medicare and Medicaid.