Hearing Aid Company Agrees to $34 Million Settlement Over False Claims Act Allegations
Earlier this year, Eargo Inc. agreed to a $34.37 settlement with the United States Department of Justice (DOJ) over allegations that it submitted – or caused the submission of – claims for hearing aid devices for reimbursement to the Federal Employees Health Benefits Program (FEHBP) with unsupported hearing loss diagnosis codes.
The FEHBP is the largest employer-sponsored group health insurance plan in the world and is administered by the Office of Personnel Management (OPM). Some of the FEHBP health insurance plans offer a hearing aid benefit, though the exact benefits vary based on the plan. FEHBP carriers that offer a hearing aid benefit mandate that claims for hearing aid devices include a hearing loss-related diagnosis codes, which must be supported by a hearing loss diagnosis. Hearing loss diagnoses are typically based on hearing tests performed by health care providers.
The United States alleged that from January 2017 through January 2021, Eargo included unsupported hearing loss-related diagnosis codes on claims for hearing aid devices that it submitted to the FEHBP and on invoices that Eargo provided to FEHBP beneficiaries to obtain reimbursement for the hearing aids. The United States alleged that even after Eargo completed an internal review of its billing and coding practice sin January 2021, from February 1, 2021 through September 22, 2021, Eargo continued to include the unsupported hearing loss-related diagnosis codes on claims and superbills. Once Eargo was aware of the issue, but continued to submit unsupported diagnosis codes, the company was knowingly submitting false claims to FEHBP.
In addition to the monetary settlement, Eargo is no longer covered by insurance plans under FEHBP. FEHBP did not permanently exclude Eargo from the program, and does expect there to be opportunities for further dialogue. Eargo President and CEO Christian Gormsen echoed that sentiment, noting that Eargo’s top management priority is to regain that coverage and that the company will continue to dedicate time and resources to its compliance program.
“We are pleased to reach the resolution announced today and plan to engage with the government regarding potential coverage of Eargo hearing aids for federal employees going forward,” said Gormsen in an SEC filing. “We remain committed to our mission to improve hearing aid accessibility and to create innovative products that reduce the stigma of hearing loss.”
“Public servants rely on the FEHBP to keep their families healthy,” said U.S. Attorney Chad E. Meacham for the Northern District of Texas. “Billing the program for medical devices patients may not need raises costs across the board. We are proud to hold Eargo accountable for its alleged use of unsupported diagnosis codes.”