DENVER – LAWFUEL – The Law News Network – Bill Leone, United…

DENVER – LAWFUEL – The Law News Network – Bill Leone, United States Attorney for the District of Colorado, in conjunction with the Office of the Inspector General for the Department of Health and Human Services, today announced that Jack Stephen Cates, owner of Boulder based MediCenter Diabetic Supply, has entered into a settlement agreement with the United States to settle allegations of submitting false claims to Medicare.

In order to satisfy the claims identified by the government, Cates has sold MediCenter, providing the proceeds, totaling over $1.6 million to the Department of Justice.

MediCenter is a durable medical equipment supply company which dispenses diabetic supplies to Medicare beneficiaries throughout the country. The company, owned by Stephen Cates, began conducting business with Medicare in 1993, while located in Juniper, Florida. The company moved to Colorado in 1997, and was located in Boulder, Colorado until its recent closure.

An investigation conducted by the Department of Justice and the Office of the Inspector General of the Department of Health and Human Services revealed that from January 1, 1998 through December 31, 2003, Cates and MediCenter improperly submitted claims to Medicare for diabetic supplies for: services not rendered; supplies that the beneficiary refused to accept; equipment that had never been ordered by the beneficiary; supplies that were returned; medically unnecessary supplies; equipment not in use; and supplies sent after a beneficiary’s death.

The United States contends that Cates and MediCenter submitted claims that constituted double billing for returned supplies and claims for which the beneficiaries’ co-payment had been improperly waived. The United States also contends that an employee of MediCenter forged physician and beneficiary signatures and was unable to provide adequate tracking records to support purported shipments of diabetic supplies for which reimbursement had been sought. Lastly, MediCenter made unsolicited telemarketing calls to Medicare beneficiaries in violation of the Social Security Act. As a result of these claims, the government alleges that MediCenter received payments to which they were not entitled.

Cates and MediCenter admit that the claims were inappropriately submitted for payment, but deny that the claims were submitted with fraudulent intent. The settlement agreement is not a concession by the United States that its claims are not well founded.

The United States has agreed to release Cates and MediCenter from any additional civil or administrative monetary claims. In return, in addition to the sale of the business, Cates and MediCenter have agreed to be permanently excluded from the Medicare program and all federal procurement and non-procurement programs, and that federal health care programs shall not reimburse Cates and MediCenter or anyone else for goods or services, including administrative and management services, furnished, ordered, or prescribed by Cates or MediCenter in any capacity.

“The complete disregard Cates and MediCenter demonstrated for the rules and regulations governing durable medical equipment providers resulted in the submission of false claims to Medicare,” said United States Attorney Bill Leone. “As a result of settlement negotiations, Cates cooperated by selling his business. He turned over the proceeds to the Department of Justice, and has agreed to never receive or accept payment from the federal government again. This settlement agreement demonstrates the harsh consequences companies face when submitting false claims to Medicare.”

This case was investigated by the Office of the Inspector General for the Department of Health and Human Services.

Medicare is a federal health insurance program that provides benefits to elderly and disabled Americans.
This case was handled by Assistant United States Attorney Edwin Winstead.

Scroll to Top