MARIETTA, Ga.--DME supplier Matria Healthcare and subsidiary
Diabetes Self Care have agreed to pay the government $9 million to
resolve allegations of Medicare fraud raised in two qui tam actions
filed under the False Claims Act.

Matria sold Roanoke, Va.-based DSC, which provided mail-order
diabetes supplies and DME such as blood glucose monitors and
testing strips, in June 2004, but the purchaser did not assume
liability for the claims asserted in the lawsuits.

The allegations stem from separate whistleblower actions filed
by Kim Politsky, formerly DSC's reimbursement director at Matria's
Georgia headquarters, and Sandra Clarke, a customer service
supervisor for DSC in Virginia.

The settlement resolves allegations from the two former
employees that from 1998 through 2003, the defendants:
--billed the government prior to obtaining a valid physician's
order, assignment of benefits or CMN;
--failed to credit Medicare for returned DME;
--billed Medicare for shipment of duplicate orders, overshipped or
undershipped DME or unordered DME;
--failed to maintain required signature logs for DME
--falsely created or altered documentation to support
--failed to maintain proof of delivery;
--falsified or changed dates of service, dates of shipment or dates
of request related to shipments;
--improperly billed Medicare for blood glucose meters;
--made false representations regarding eligibility to participate
in various state Medicaid programs; and
--falsely billed for items shipped from a California location
without a valid Medicare supplier number.

According to a statement from Bothwell & Simpson, PC,
Roswell, Ga., which represented Politsky, Clarke's complaint also
alleges that DSC billed Medicare for items shipped to patients who
were dead, and that she was retaliated against after raising
concerns about the billing practices.

"These cases were compelling, because you had two different
employees, working for different parts of a company in different
states, raising basically the same issues regarding the defendant's
improper billing practices," said attorney Mark Simpson.

Under the settlement agreement--in which neither the U.S. denied
the grounds for its case nor Matria acknowledged any
liability--Clarke will receive $1.2 million and Politsky will
receive $792,000.

The False Claims Act, enacted during the Civil War, is a primary
tool used by the government to fight fraud and abuse in federal
programs and procurement, allowing it to recover triple the amount
of its damages plus civil penalties, according to a U.S. Department
of Justice release.