Feds raid Med-Care Diabetic

Employees sent home as agents remove boxes of files
Friday, January 16, 2015

BOCA RATON, Fla. – An attorney for a mail-order contract supplier that was raided by the FBI last week says the company has “nothing to hide.”

“Med-Care Diabetic & Medical Supplies has always been transparent in cooperating with…inquiries,” said Justin Weddle, an attorney with Brown Rudnick, in an email to HME News. “The company has nothing to hide."

Federal agents on Jan. 14 descended on the company about 9:30 a.m. and sent most of the company’s employees home. Agents were seen removing boxes throughout the day, according to local news reports. Representatives of the local police department, the Florida Division of Insurance Fraud, the Internal Revenue Service and the Department of Homeland Security also participated.

“The process used today was unexpected, but the company is cooperating, and will continue to cooperate, fully,” said Weddle. 

Weddle said that in July the company learned that a federal regulatory agency was inquiring about its business practices. 

“We contacted them and offered to answer their questions and provide whatever information they needed,” he said.

At press time, neither the FBI nor CMS, which in 2013 awarded the company a national contract for mail-order diabetes testing supplies, had responded to requests for comment.

A seizure is an ‘extreme’ action, say industry attorneys, although it doesn’t point to evidence of guilt.

“A seizure means the government has credible evidence that documentation may be moved or destroyed or somehow tampered with,” said Jeff Baird, chairman of the Health Care Group at Brown & Fortunato. 

Med-Care has come under scrutiny before. Med-Care president Dr. Steve Silverman was subpoenaed by Sen. Claire McCaskill, D-Mo., to testify at a 2013 hearing before the Senate Subcommittee on Financial and Contracting Oversight. The company had been the subject of complaints for its marketing practices.

Danny Porush, one of the company’s top executives, was convicted of insider trading and money laundering, among other things, in 2002 and ordered to pay $200 million in restitution. He inspired a character in the movie, “The Wolf of Wall Street.”

Med-Care was founded in 1999. It has 500 employees and serves more than 250,000 patients, according to its website. In 2013, it received nearly $11.2 million in reimbursement from Medicare for blood glucose test strips, according to the HME Databank.

One big question: Could Med-Care’s mail-order contract be at risk as a result of last week’s actions? 

Maybe yes, maybe no, says Baird.

“The contract says that Med-Care must adhere to all laws and statutes and regulations including supplier standards,” he said. “The competitive bidding implementation contractor could take steps to terminate the contract. Or, they might sit back and say, ‘innocent until proven guilty.’”

The company could also have its PTAN number revoked, he said.