Florida-based medical equipment company Electrostim Medical Services Inc. (EMSI) and its founder, Mario Garcia Jr., agreed to pay $20 million to resolve claims under the federal False Claims Act, Pennsylvania prosecutors announced Friday. The settlement addresses allegations that EMSI improperly billed government healthcare programs for unnecessary and duplicate sales of medical devices designed to provide pain relief via electrical stimulation.

Allegations of Unnecessary Billing

EMSI supplies transcutaneous electrical nerve stimulation (TENS) systems, which use low-level electrical currents to alleviate pain in targeted body areas. Prosecutors allege that EMSI, between 2018 and 2019, improperly billed patients for unneeded replacement electrodes and batteries, even when they had received fully equipped starter kits. Additionally, EMSI allegedly charged for replacement electrodes for patients using specialized garments, like gloves or socks, which did not require separate electrodes.

The U.S. Attorney's Office for the Eastern District of Pennsylvania explained that the company’s billing practices violated the False Claims Act, causing government programs like Tricare to overpay and resulting in extra co-pays for patients. The complaint also involved agencies such as the U.S. Department of Veterans Affairs and the U.S. Postal Service.

Electrostim Medical $20M Settlement : Settlement Terms

Under the settlement, EMSI and Garcia agreed to pay $20 million, with the payment schedule beginning with $2.5 million within 60 days and another $2.5 million within 180 days. The remaining balance will be spread over five years. Should EMSI become insolvent or be sold, the remaining amount will be accelerated and due immediately. Moreover, if EMSI attempts to declare bankruptcy, the settlement amount owed could increase to as much as $205 million, as stipulated in the agreement.

EMSI’s Response and Denial of Wrongdoing

Despite the settlement, EMSI and Garcia have not admitted any wrongdoing. EMSI released a statement maintaining that its billing practices were "accurate, appropriate, and consistent with known guidance" but decided to settle to avoid further litigation and costs. Garcia also expressed relief that the resolution allows the company to move forward, continuing to deny all allegations.

Government’s Message on Healthcare Fraud

U.S. Attorney Jacqueline C. Romero emphasized that EMSI and Garcia prioritized profit over patient care. "This conduct will not be tolerated by my office," she said, stressing the importance of holding medical equipment suppliers accountable for fraudulent billing practices that undermine government healthcare programs and the well-being of patients.

Electrostim Medical $20M Settlement : Legal Representation

The United States is represented by Charlene Keller Fullmer, Gregory B. David, and Bryan C. Hughes from the U.S. Attorney's Office for the Eastern District of Pennsylvania. EMSI and Garcia are represented by Virginia Gibson of Hogan Lovells and Marc S. Raspanti of Pietragallo Gordon Alfano Bosick & Raspanti LLP.