Illinois Firm JAS Hit with $500K Medicaid Fraud Settlement

RALEIGH, N.C. – Another healthcare hustler caught skimming from the system. Joint Active Systems, Inc. (JAS), an Illinois medical device manufacturer, will shell out $500,000 to settle accusations of bilking the North Carolina Medicaid program, United States Attorney Michael Easley announced today. The feds allege JAS knowingly submitted false claims for its range-of-motion devices, lining its pockets while draining funds meant for legitimate patient care.

According to the U.S. Attorney’s Office, JAS, based in Effingham, Illinois, couldn’t directly bill North Carolina Medicaid between January 6, 2012, and January 29, 2021. Why? They didn’t meet the state’s requirements or have the necessary credentials. But that didn’t stop them. Instead, JAS allegedly cooked up a scheme, partnering with local North Carolina orthotics and prosthetics providers to submit claims on their behalf. The kicker? JAS directed these providers to mislabel the “EZ” range-of-motion devices as standard orthotics, using “L-Codes” under the Healthcare Common Procedure Coding System. This bypassed crucial medical necessity reviews and authorizations.

The government alleges JAS knew full well its devices didn’t qualify for reimbursement as “L-Code” orthotics – they weren’t even on the North Carolina Medicaid fee schedule. To add insult to injury, the Centers for Medicare and Medicaid Services officially designated the EZ devices as “E-Code” (durable medical equipment), not “L-Code” orthotics. Yet, JAS allegedly continued the charade, paying the North Carolina providers a cut of the fraudulent reimbursement. A classic kickback scheme, plain and simple.

“The Department of Justice is actively pursuing health care companies and medical device manufacturers who overcharge government healthcare programs,” Easley stated bluntly. “We cannot allow companies to bypass rules and regulations to enrich themselves, while depleting taxpayer funds set aside for legitimate patient care.” North Carolina Attorney General Josh Stein echoed the sentiment, vowing to hold accountable those who drain resources from vital healthcare programs, “no matter how elaborate and layered the scheme may be.”

Under the Federal and North Carolina False Claims Acts, the government could have demanded triple the fraudulently obtained funds, plus hefty civil penalties. This settlement avoids a protracted legal battle, but JAS still has to cough up $500,000. It’s important to note that this is a settlement, meaning JAS denies wrongdoing and there has been no judicial admission of guilt. Still, the message is clear: attempt to defraud Medicaid, and you *will* face consequences.

The case was spearheaded by the United States Attorney’s Office for the Eastern District of North Carolina and the Medicaid Investigations Division of the North Carolina Attorney General’s Office. Special Deputy Attorney General Matthew R. Petracca, also a Special Assistant United States Attorney, led the charge. This investigation underscores the ongoing commitment to rooting out fraud within the healthcare system and protecting taxpayer dollars. The Eastern District of North Carolina continues to aggressively investigate and prosecute healthcare providers who exploit government programs and endanger patients.

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