Executive Summary
Laws and Precedent
WASHINGTON – Semler Scientific Inc. and its former distributor, Bard Peripheral Vascular Inc., have agreed to pay a combined total of nearly $37 million to resolve allegations that they violated the False Claims Act. The companies were accused of knowingly causing and conspiring to cause the submission of false claims to Medicare for photoplethysmography tests performed using their FloChec and QuantaFlo devices, which were used in connection with the diagnosis of peripheral arterial disease (PAD) but did not meet Medicare reimbursement requirements.
Settlement Details and Allegations
Under the terms of the settlement, Semler Scientific Inc. will pay $29.75 million, while Bard Peripheral Vascular Inc. and its related companies will pay $7.2 million. The Justice Department alleged that Semler and Bard falsely claimed that tests conducted with the FloChec and QuantaFlo devices were reimbursable by Medicare, leading healthcare providers to submit fraudulent claims.
The core of the allegations centers on the devices’ inability to perform an ankle brachial index (ABI) test, a requirement for Medicare reimbursement under specific Current Procedural Technology (CPT) billing codes (93922, 93923, or 93924). Additionally, Medicare does not cover noninvasive vascular tests that utilize photoelectric plethysmography, also known as photoplethysmography, which is the technology employed by both FloChec and QuantaFlo.
Misrepresentation of Device Capabilities
From approximately 2010 through 2024, Semler manufactured, marketed, and distributed the FloChec and QuantaFlo devices. Despite the Food and Drug Administration (FDA) informing Semler that the devices did not perform an ABI and could not be called a “digital ABI,” Semler allegedly represented to healthcare providers that Medicare would reimburse customers for tests performed using these devices if submitted under the relevant CPT codes.
The United States further alleged that Semler continued to market the devices as Medicare-reimbursable even after receiving concerns from third parties regarding their eligibility for reimbursement. Bard served as Semler’s distributor from 2012 through 2022 and admitted to certain allegations, receiving cooperation credit under Justice Department guidelines.
Official Statements and Regulatory Action
“Medicare billing regulations are created, in part, to protect the public fisc,” stated Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division. He emphasized the responsibility of manufacturers and distributors to be honest about the rules and regulations applicable to their products.
U.S. Attorney Gregory W. Kehoe for the Middle District of Florida added, “When critical information is misrepresented or skewed for profit or personal gain, the limited resources available for our healthcare system are diminished.” Acting Special Agent in Charge Isaac M. Bledsoe of the Department of Health and Human Services Office of Inspector General (HHS-OIG) highlighted that companies misrepresenting product capabilities and encouraging improper billing drain critical taxpayer-funded resources.
In addition to the civil settlement, Semler has entered into a five-year Corporate Integrity Agreement with HHS-OIG. This agreement mandates substantial internal compliance reforms for Semler Scientific, aiming to ensure the company operates appropriately and lawfully moving forward.
Whistleblower Action and Government’s Commitment
The allegations originated from a lawsuit filed by Robert Kane and Franklin W. West under the qui tam provisions of the False Claims Act. This provision allows private parties to bring suit on behalf of the government and share in any recovered funds. Mr. Kane and Mr. West are set to receive approximately $6.5 million from this settlement.
The resolution of this matter underscores the government’s commitment to combating healthcare fraud. Tips and complaints about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services.
Protecting Public Funds
This significant settlement holds medical device companies accountable for misrepresenting their products’ Medicare reimbursement eligibility. It reinforces the importance of transparent and accurate billing practices to safeguard taxpayer-funded healthcare programs and ensures that critical resources are directed to legitimate medical services.
