Semler Scientific Inc. And Bard Peripheral Vascular Inc. To Pay Nearly $37M To Resolve False Claims Act Allegations Relating To Flochec And Quantaflo Devices

WASHINGTON - Semler Scientific Inc. has agreed to pay $29.75 million and its former distributor, Bard Peripheral Vascular Inc. and its related companies, has agreed to pay $7.2 million to resolve allegations that they violated the False Claims Act, 31 U.S.C. §§ 3729-3733, by knowingly causing, and conspiring to cause, the submission of false claims to Medicare for photoplethysmography tests performed using the FloChec and QuantaFlo devices in connection with the diagnosis of peripheral arterial disease (PAD).

"Medicare billing regulations are created, in part, to protect the public fisc," said Assistant Attorney General Brett A. Shumate of the Justice Department's Civil Division. "It is incumbent upon manufacturers and their distributors to be honest with their customers about the rules and regulations that apply to their products."

"Government programs expect an honest exchange between suppliers and programs funded by taxpayer dollars," said U.S. Attorney Gregory W. Kehoe for the Middle District of Florida. "When critical information is misrepresented or skewed for profit or personal gain, the limited resources available for our healthcare system are diminished."

"Medical device companies that misrepresent the capabilities of their products and encourage providers to bill Medicare for services that do not meet coverage requirements drain critical taxpayer-funded resources," said Acting Special Agent in Charge Isaac M. Bledsoe of the Department of Health and Human Services Office of Inspector General (HHS-OIG). "In addition to this settlement, HHS-OIG has entered into a new five-year Corporate Integrity Agreement with Semler Scientific, which agreed to undertake substantial internal compliance measures to help ensure that the company remains appropriate and lawful moving forward."

PAD in the lower extremities is the narrowing or blockage of the vessels that carry blood between the heart and legs. Providers traditionally diagnose PAD by conducting a test called an ankle brachial index (ABI) to estimate the severity of the blockage in a patient's limbs. To qualify for Medicare reimbursement, PAD testing must satisfy the requirements of Current Procedural Technology (CPT) billing codes 93922, 92923 or 93924. Each of these billing codes requires that a provider conduct an ABI test plus certain additional testing. In addition, Medicare does not cover noninvasive vascular tests that use photoelectric plethysmography, also known as photoplethysmography, which uses a light sensor to detect changes in blood volume.

From approximately 2010 through 2024, Semler manufactured, marketed, and distributed the FloChec and QuantaFlo devices to customers throughout the United States for use in connection with the diagnosis of PAD. Both devices use a light sensor to detect changes in blood volume. Additionally, when the Food and Drug Administration (FDA) cleared FloChec and QuantaFlo, the agency told Semler that the devices did not perform an ABI and could not be called a "digital ABI."

The settlement announced today resolves allegations that Semler and Bard falsely claimed that tests conducted using the FloChec and QuantaFlo devices were reimbursable by Medicare and caused healthcare providers to submit false claims to Medicare. The United States alleged that Semler knew that testing conducted using FloChec and QuantaFlo did not satisfy CPT codes 93922, 93923, or 93924 because the devices do not perform an ABI. Additionally, the United States alleged that Medicare reimbursement for FloChec and QuantaFlo tests is barred because the devices use photoplethysmography. Nevertheless, Semler allegedly represented to healthcare providers that Medicare reimbursed customers for tests performed using Flochec and QuantaFlo if they submitted CPT codes 93922, 93923, and 93924. Even after Semler received concerns from third parties about reimbursement, Semler allegedly continued to market the devices as reimbursable by Medicare.

Bard served as Semler's distributor from 2012 through 2022. As part of the settlement, Bard admitted certain allegations and received cooperation credit under Justice Department guidelines.

In addition to the civil settlement, Semler has entered into a five-year Corporate Integrity Agreement with the Office of Inspector General of the United States Department of Health and Human Services (HHS-OIG), which obligates Semler to undertake substantial internal compliance reforms.

The allegations were originally brought in a lawsuit filed by Robert Kane and Franklin W. West under the qui tam provisions of the False Claims Act. Under the act, private parties may bring suit on behalf of the government and share in any recovery. Mr. Kane and Mr. West will receive approximately $6.5 million as their share of the recovery.

The government's resolution of this matter illustrates the government's emphasis on combating health care fraud. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The settlement resulted from a coordinated effort among the Civil Division's Fraud Section and the U.S. Attorney's Office for the Middle District of Florida. Senior Trial Counsel Kristen M. Echemendia, Trial Attorney Martha Glover, and Investigator Robert L. Jodoin of the Department of Justice, Civil Division, Fraud Section and Assistant U.S. Attorney Kelley Howard-Allen for the Middle District of Florida handled the matter.

The claims resolved by the settlement are allegations only and there has been no determination of liability.