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Diabetic shoe company to pay $5.5 million

On Behalf of | Jan 26, 2022 | Medicare / Medicaid Fraud, Qui Tam Cases

The Florida-based Foot Care Store, which did business as Dia-Foot, agreed to pay $5,538,338 to settle allegations that it violated the false claim act between 2013 and 2018. The settlement resulted from a former employee filing a claim – and they will subsequently receive a portion settlement.

According to the Department of Justice (DOJ), Dia-Foot sold diabetic shoe inserts to customers. Despite claiming that many of its products were custom-made for the customer’s feet, the whistleblower revealed that the company used generic foot models. These inserts were dispensed to diabetic patients who had a prescription from Medicaid and Medicare to get the custom inserts. Despite claiming to be “proud to be Medicare-complaint” and “received Medicare approval,” Dia-Foot engaged in false advertising to secure these approvals and increase its profit margins.

Moreover, these fake inserts can actually worsen the foot conditions because they do not treat the foot problems caused by diabetes. The symptoms can include pain from severe nerve damage and swelling, which causes too much pressure on one part of the foot. The insert is supposed to alleviate the pressure.

Dia-Foot and its owner now entered into a three-year Integrity Agreement with the U.S. Department of Health and Human Services’ Office of Inspector General. Dia-Foot must update all procedures and policies to become compliant. There will also be a quarterly review by an independent organization to ensure that Dia-Foot is compliant.

Whistleblower uses qui tam

The former employee used the qui tam provision of the False Claim Act, which enabled them to file a lawsuit on behalf of the federal government. In this case, the whistleblower is entitled to 15-30% of the $5.5 million involved in the settlement. There were larger qui tam awards involving the health care industry in 2021, but it still illustrates how important whistleblowers are to qui tam claims.