Health Law Daily Wrap Up, FALSE CLAIMS ACT—SETTLEMENT AGREEMENTS: Physicians pay $375,000 to resolve allegations of fraud schemes involving electroacupuncture devices, (Apr 7, 2025)

By Susan L. Smith, JD, MA

A physician has paid $290,000 and the medical director and co-owner of a medical corporation agreed to pay $85,000 to resolve allegations arising from a fraudulent scheme involving electroacupuncture devices that was orchestrated by a chiropractor allegedly in violation of the False Claims Act and Anti-kickback Statute.

The Department of Justice (DOJ) has entered into Settlement Agreements with two physicians to settle allegations that they caused the submission of hundreds of false claims to Medicare related to a fraud scheme involving electroacupuncture devices. The two settlements relate to a fraud scheme orchestrated by a chiropractor who used various companies he owned to seek and receive reimbursement from Medicare for surgically implanted neurostimulators at multiple locations even though the companies did not perform surgery or implant neurostimulators. The U.S. alleged that the scheme violated the False Claims Act and the Anti-Kickback Statute. The chiropractor entered into a Settlement Agreement with the U.S.to resolve the allegations in July of 2024. The two physicians will pay $375,000 collectively to resolve the U.S. allegations brought against them (Lipman Settlement Agreement, Oct. 25, 2024, Woo-Ming Settlement Agreement, Mar. 5, 2025).

Chiropractor’s settlement. In a prior settlement with the U.S., the chiropractor stipulated that he and his companies taped a disposable electroacupuncture device called Stivax to their patients’ ears that does not require surgical implantation and is not reimbursable by Medicare (Brown Settlement Agreement, July 10, 2024). The chiropractor owned a medical company and co-owned a medical corporation located in San Diego with one of the physicians. The medical corporation was enrolled as a Medicare provider. The chiropractor also owned a limited liability company in Oklahoma that was enrolled as a Medicare provider.

Covered Conduct. The United States contends that, from July 2018 to June 2020, the chiropractor and his two companies submitted false claims for payment to Medicare through his companies for surgically implantable neurostimulators when the companies actually provided electro-acupuncture services (Stivax). To be reimbursable by Medicare, implantable neurostimulators require surgically implantable devices. The chiropractor’s companies personal did not surgically implant neurostimulators or perform surgery in an operating room.

The U.S. contended that despite statements in the claims submitted to Medicare Part B asserting that the co-owner physician was the rendering or referring provider, he at no time rendered, referred, supervised, or reviewed any medical procedures, including Stivax procedures, that were performed at the various locations. The chiropractor agreed to pay the U.S. $180,00 and was excluded from Medicare, Medicaid, and other federal health care programs for a period of five years based on the Covered Conduct.

Co-owner and medical director. The settlement with the physician from Marietta resolved allegations that his solely owned company and the company he co-owned with the chiropractor submitted false claims to Medicare for surgically implanted neurostimulators. The U.S. contended that the Covered Conduct occurred from August 28, 2018 to August 5, 2019. The physician denied the allegations and contentions in the Covered Conduct. The physician will pay the U.S. $85,000 in restitution and has agreed to the requirements related to future and previously submitted unallowable costs.

Physician. The physician is the owner of a medical corporation. The U.S. contends that the physician participated in an arrangement with the chiropractor from June 27, 2019, to February 20, 2020, in which the chiropractor’s company and its personnel provided electro-acupuncture services using the Stivax device in the physician’s offices on Medicare patients the physician referred. The U.S. contended that the physician knowingly and willfully solicited and received remuneration from the chiropractor in the form of payments per Stivax procedure in return for patient referrals to the chiropractor for furnishing services paid for by Medicare. The U.S. further contended that the physician submitted false claims to Medicare for surgically implantable neurostimulators. The physician will pay the U.S. $290,000 (Settlement Amount) to resolve the allegations and agreed to abide by the requirements related to future and previously submitted payments.

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