Sleep Study and CPAP Fraud

Companies providing diagnostic tests, such as sleep labs, and durable medical equipment, like a CPAP, have been accused of fraudulent billing of government healthcare programs, including Medicare, through lawsuits under the False Claims Act.  Whistleblowers with evidence of improper billing of Medicare can file a qui tam lawsuit and may be eligible for a reward of between 15 and 30 percent of the government’s recovery under the law.

Our whistleblower attorneys will evaluate evidence of unlicensed technicians, unnecessary services or kickbacks involving sleep clinics.  We provide a free, confidential initial consultation to discuss the False Claims Act and your evidence.

Medicare Spending on Sleep Clinics

Sleep testing isn’t cheap.  From 2001 to 2009, Medicare payments for sleep studies increased from $62 million to $235 million.  Prices in the sleep industry have been skyrocketing since then, with annual increases of approximately 8-9 percent.  Overall, sleep apnea is a $30+ billion industry.  This makes it an area where fraud can slip through the cracks.

Potential Violations of the False Claims Act

Medicare covers diagnostic testing of patients for sleep disorders, such as obstructive sleep apnea, performed in sleep labs. Medicare will also cover the rental of CPAP equipment, which is considered durable medical equipment, to treat the condition. However, there are a number of laws and conditions on coverage which providers and suppliers must follow. Some examples of potential violations include:

Improper Billing

In 2013, the Office of Inspector General performed a study on polysomnography services following an increase in Medicare spending of 39 percent from 2005 to 2011.  OIG examined claims for reimbursement from hospital outpatient departments, physician owned sleep laboratories and independent diagnostic testing facilities.  OIG identified $17 million in claims that failed to meet one or more of the Medicare requirements for payment.  This included some providers submitting two claims in one day, which is impossible since the process requires an overnight stay.  Other examples of questionable billing included unbundling split-night services and multiple titration studies.


Arrangements between sleep labs and DME manufacturers or physicians may potentially violate the Anti-Kickback Statute (AKS) or the Stark Law.  In 2011, the OIG expressed concern about an arrangement between a durable medical equipment (DME) supplier of CPAP machines and an independent diagnostic testing facility under the AKS.

Unlicensed Employees

Sleep studies must be conducted by licensed or certified technicians in order to be eligible for reimbursement by Medicare.  The qualifications are met through a state or national body offering the required credentials.  If the sleep lab submits claims for reimbursement of polysomnographic (PSG) sleep studies performed by ineligible employees, it violates the False Claims Act.

Unapproved Facilities

A 2016 settlement in the Northern District of California against a sleep clinic included allegations that the sleep clinic was performing testing at a location unapproved by Medicare and submitting claims as if it was performed at a Medicare-approved facility.

Medical Device Sales

Medicare rules and regulations prohibit sleep testing providers from supplying durable medical equipment or sharing their location with a DME provider.  If a facility is billing Medicare for testing and providing CPAP machines to Medicare customers, it is in violation of Medicare rules.

The Benefits of Reporting

The Right Thing to Do

Whistleblowers have become an increasingly important tool for law enforcement agencies.  Without tips from individuals with non-public information, a company’s violation of the Medicare rules might cost the government tens or hundreds of millions.

Whistleblower Rewards

The U.S. Government pays out hundreds of millions of dollars every year to whistleblowers under the False Claims Act.  The law permits the filing of qui tam lawsuits by relators on behalf of the government.  The Department of Justice investigates the information in the lawsuit.  If there is a recovery for the U.S. Government and the relator is eligible, a reward of between 15 and 30 percent of the total amount may be awarded to the whistleblower.

Retaliation Protections

Section 3730(h) of the False Claims Act protects a whistleblower from retaliation by their employer.  It allows individuals to sue their employer for compensation including back pay, reinstatement, attorneys’ fees and other relief to make the individual whole.

The False Claims Act

The False Claims Act imposes substantial penalties on doctors, hospitals and other health care companies engaged in fraud while rewarding whistleblowers for providing evidence of the misconduct to the Justice Department through a qui tam lawsuit.

Our Federal False Claims Act lawyers have guided whistleblower cases to several significant settlements on behalf of relators. Our largest unsealed cases are currently focused on kickbacks in violation of the Anti-Kickback Statute, but we have a broad base of experience across other types of Medicaid and Medicare fraud. In the pursuit of suspected frauds, we have brought cases to the attention of the government in many states, including New York, Florida, California and here in Philadelphia. In 2016, for example, we helped the federal and state governments recover $54 million from a Valeant subsidiary for kickbacks paid through speaker programs.

The law rewards whistleblowers for information with between 15 and 30 percent of the proceeds from the litigation, subject to numerous terms and conditions specified in the law. During President Obama's Administration, the U.S. paid out more than $4 billion to whistleblowers. For those not familiar with whistleblower cases, we have written a quick guide to the process.

Our False Claims Act attorneys undertake a thorough review of whistleblower evidence up front during the case evaluation process. We confirm that there is sufficient evidence of both inappropriate government billings as well as evidence of intentional or reckless conduct by the individuals in charge. We understand that no one person needs to have every piece of the puzzle and we have evaluated thousands of potential cases while honing our judgment. We also answer any questions that a whistleblower has in order to ensure that you can make an informed judgment about whether to proceed with a qui tam lawsuit.

To begin the process and get your questions answered, use our contact form or call 1-800-590-4116 for a free, confidential and no-obligation initial legal consultation from our whistleblower attorneys.