The owners of a defunct Shoreview-based medical device company, Empi Inc., have agreed to pay the Justice Department $7.6 million to resolve allegations of overbilling a military health care program for pain-fighting devices.
The Justice Department on Tuesday accused Empi of overbilling the government by encouraging Tricare beneficiaries to place orders for nerve-stimulation electrodes that they didn’t need or use. The company did not admit wrongdoing or liability as part of the settlement.
Empi had been owned by California-based DJO Global via a corporate deal engineered by private-equity firm Blackstone Group. Under DJO Global, Empi ceased operations in late 2015 because of declining reimbursement rates for its products, the company said at the time.
Empi sold devices for transcutaneous electrical nerve stimulation (TENS) therapy, in which electric current is applied to the body to relieve pain in the back, shoulders, knees and other areas. The TENS electrodes need to be replaced over time as the device is used.
The Justice Department said Tuesday that Empi sales reps used an “inappropriate” sales tactic it called “assumptive selling,” which involved inducing Tricare beneficiaries to order unneeded TENS electrodes. Tricare is the health care insurance program for uniformed service members and their families.
Empi’s inappropriate sales of TENS electrodes lasted from 2010 through 2015, “with a particularly steep increase in the number of beneficiaries receiving unnecessary quantities in 2014-2015,” the Justice Department news release said Tuesday.
Requests for comment to DJO Global were not returned Tuesday afternoon.
The case was handled by the civil fraud unit of the Minnesota U.S. attorney’s office, the commercial litigation branch of the Justice Department and the inspector general of the Defense Department.