Montgomery Man Charged in Medicare Fraud Scheme

Brian Racey, 42, allegedly submitted at least $250,000 in fraudulent Medicare claims for bone growth stimulators from 2005 to 2011

Brian Racey, 42, of Barbaras Court in Montgomery Township, was charged by the U.S. Department of Justice for health care fraud for an alleged scheme where submitted a quarter-million in fraudulent Medicare claims for bone stimuators over a six-year period, according to an indictment from the U.S. District Court.

The Medicare claims, according to the indictment, did not meet guidelines.

Racey worked as a Tri-State territory manager from April 2004 to March 2011 for a company named Orthofix Inc., which manufactured and sold medical devices for human use, including bone growth stimulation devices.

The U.S. District Court alleges Racey forged doctors’ notes and prescriptions to make it seem the devices cleared Medicare’s guidelines, and thus, getting reimbursed by Medicare.

It also alleges numerous physicians in Racey’s territories prescribed stimulators that did not meet Medicare’s guidelines.

These devices were Spinal-Stim, Cervical-Stim and Physio-Stim: The first two were used as an adjunct to spinal and cervical fusion surgery, and the last was used to treat improperly healing bones.

Racey’s expertise, the indictment alleges, was Physio-Stim.

The indictment, filed in the U.S. District Court of Eastern District of Pennsylvania, said Orthofix was allowed to submit contractor claims for directly to Medicare for reimbursement of bone growth stimulators to beneficiaries.

Medicare reimbursed 80 percent to Orthofix for devices that ranged between $3,500 to $4,400 per device, according to the indictment.

Racey, according to the indictment, was aware that Physio-Stim was only covered by Medicare if a patient had a “nonunion of a long bone fracture” — x-ray evidence of a fracture that hasn’t healed in at least three months before using the stimulator.

Furthermore, Medicare required Racey to submit physician’s written proof that there was no evidence of healing before the treatment and during the treatment, according to the indictment.

Racey’s job, according to the indictment, was to take medical records and prescriptions and forward those documents to an insurance administrator at the Orthofix home office in Minnesota. The insurance administrator would then prepare and submit the claim to the carrier.

In 2008, Racey allegedly submitted a claim that did not meet guidelines for a bone stimulator for a patient who had a femur fracture near the hip joint; the patient did not have a fracture where healing had stopped for three months, according to the indictment.

Medicare paid $3,020 for the claim after being processed at Orthofix, according to the indictment. Racey got a commission of more than $500 for the order, according to the indictment.

In a second case in 2008, Racey allegedly submitted another false claim for a patient in April 2008, according to the indictment.

A patient hurt their arm from a fall and went to the emergency room. Fifteen days later, the patient visited a doctor due to pain in their arm. An x-ray showed there was a fracture that was healing, according to the indictment. A bone stimulator was prescribed for the patient to wear, according to the indictment.

Medicare paid $3,020 for the claim, with Racey allegedly receiving more than $500, according to the indictment.

All in all, Medicare paid at least $250,000 for at least 100 claims allegedly submitted by Racey, according to the indictment.


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