Wound Care Manufacturer Fined $7.5 Million for Fraud

St. Paul, Minn.

Augustine Medical (today known as Arizant) and its former officers who pleaded guilty to Medicare fraud have been ordered to pay more than $7.5 million in fines, the Bureau of National Affairs reported.

U.S. District Judge Ann Montgomery handed down the sentence to the wound care manufacturer in September, months after a plea agreement halted the criminal trial.

Augustine executives were indicted in early 2003 after an FBI investigation found that the company misled medical providers into submitting false reimbursement claims for its Warm-Up Active Wound Therapy.

In addition to claiming the product was reimbursable under Medicare, Augustine Medical also was accused of instructing health care providers not to contact Medicare agencies about coverage and to list the wound cover under a generic code for medical-supplies category without identifying it.

The case cost providers $3.7 million in false claims, Assistant U.S. Attorney Michael Quinley told the Minneapolis Star-Tribune.

The original indictment was the first resulting from “Operation Headwaters,” a joint undercover operation conducted by the FBI, HHS OIG and the U.S. Postal Inspection Service.