Appleton Clinic to Pay Over $380,000 to Resolve False Claims Act Allegations Relating to the Marketing and Use of Electric Stimulation Devices

Brad D. Schimel, First Assistant U.S. Attorney for the Eastern District of Wisconsin, announced that Apple Medical Clinic and its principal, Dr. Michael Johnson, agreed to remit a total of $382,362.95 to the United States to resolve allegations that they violated the False Claims Act ("FCA"), 31 U.S.C. §§ 3729-3733, by causing the submission of false claims to Medicare for electrical muscle stimulation, vitamin injections, and other related services that were not medically reasonable or necessary. The settlement amount is based on their ability to pay and consists of a $175,000 payment and the United States' retention of $207,362.95 held by the Centers for Medicare & Medicaid Services.

Located in Appleton, Wisconsin, Apple Medical Clinic ("Apple") offered outpatient treatment to block pain using the RST Sanexas neoGEN-Series device (the "Sanexas")-an electric stimulation device developed by Nevada-based RST-Sanexas, Inc. ("RST")-in conjunction with vitamin blend injections and other ancillary services, such as epidermal nerve fiber density testing.

These combined treatments, and the way they were administered, were not medically necessary and not covered by Medicare. Nevertheless, Dr. Johnson advertised them as covered by and billable to the Medicare Program. Dr. Johnson was also a major national distributor of the Sanexas and marketed the device for indications outside its FDA clearance and contrary to National and Local Coverage Determinations.

In particular, National Coverage Determination 160.7.1 states that "[e]lectrical nerve stimulation treatments furnished by a physician in his/her office, by a physical therapist, or outpatient clinic are excluded from coverage . . . ." Protocols for the use of the Sanexas with vitamin injections were formulated to maximize profit without regard for medical necessity.

RST previously resolved False Claims Act allegations against it, along with its owners and affiliates, in a related agreement to pay $1.5 million to the United States. More information about this settlement and the electronic stimulation National Initiative spearheaded by the U.S. Attorney's Office for the Eastern District of Pennsylvania may be found here: RST-Sanexas, Inc. and Its Owners Agree to Pay $1.5 Million; and U.S. Attorney Announces Additional Enforcement Action as Part of National Effort to Combat Electrical Stimulation Fraud.

The matter was handled in the Eastern District of Wisconsin by Assistant U.S. Attorneys Lisa Yun and Michael Carter. The overall resolution obtained in this matter was the result of a coordinated effort between the Justice Department's Civil Division, Commercial Litigation Branch, Fraud Section, and the United States Attorney's Offices for the Eastern and Western Districts of Pennsylvania and the Eastern District of Wisconsin. Investigative support and assistance was provided by the Department of Health and Human Services, Office of Inspector General.

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For further information contact:

Public Affairs Officer Steve Caballero

(414) 297-1700

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