DOJ: News Release

Fraud Investigation Nets $526,000 for Medicaid Program

HELENA – The state of Montana has received $526,000 in the settlement of a case involving a health equipment company that was accused of overbilling Montana’s Medicaid program, Attorney General Mike McGrath said Tuesday.

Rotech Medical, Inc., and its subsidiary Community Home Oxygen of Montana (also known as Community Oxygen Services, Inc.) have paid $526,000 directly to the state of Montana. The money will be returned to the Montana Department of Public Health and Human Services to repay the Medicaid program.

The Florida-based company has agreed to pay a total of $17 million to settle the false claims case with the federal government and five states, including Montana. As part of the settlement, Rotech and its parent company Integrated Health Services did not admit the claims alleged to have occurred between January 1995 and December 1999.

“It’s important that we stop unethical companies like this from ripping off the program and therefore all Montana taxpayers,” McGrath said. “Investigations like this are extremely time-consuming but, given how tight our Medicaid budget is, it’s especially important that we recoup the money so that legitimate services can be funded.”

McGrath also noted that, under the settlement agreement, Rotech has agreed to abide by a corporate integrity agreement that outlines specific practices it will follow in the future. The company is currently reorganizing under bankruptcy proceedings.

The two-year investigation by Montana’s Medicaid Fraud Control Unit found that Community Home Oxygen evaded state Medicaid regulations by:

  • billing for durable medical equipment that was never provided
  • billing for the sale of medical equipment that was actually rented
  • double-billing claims for equipment, and
  • billing for supplies and equipment that were either not allowed or were medically unnecessary.

Agent Gordon Hage of the Montana Department of Justice, Division of Criminal Investigation, investigated the case in cooperation with the FBI and the Office of Inspector General, US Department of Health and Human Services.

McGrath said that he appreciated the cooperation of the US Attorney’s Office in handling the legal filings and settlement negotiations.

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