Crown Medical Solutions and owners Michelle and Philanzo King have agreed to pay $825,000 to resolve US government allegations that they submitted false Medicare claims for durable medical equipment that was medically unnecessary, improperly prescribed or both.
The civil settlement resolves allegations under the Access DX $36.4m False Claims Act settlement — Lawyer Monthly covering Medicare claims submitted between November 1, 2017 and April 30, 2019.
Crown Medical supplied durable medical equipment including knee braces, heel stabilisers and back braces. The US Department of Justice alleged that the company and its owners billed DOJ Charges 455 People Over $6.5B Health Fraud for equipment provided to beneficiaries without satisfying medical-necessity or physician-prescription requirements.
Michelle King served as Crown Medical’s president and chief executive and owned 50% of the company. Philanzo King was its vice president and owned the remaining 50%.
The $825,000 settlement was based on the defendants’ financial condition. Under the agreement, Crown and the Kings are jointly and severally liable for the amount, with $25,000 due initially and the remaining $800,000, plus interest, payable under a schedule running to the end of 2028.
The settlement does not constitute a finding that the defendants committed fraud. The Justice Department has expressly stated that the claims resolved are allegations only and that there has been no determination of liability.
The case began under the Trade Fraud Task Force Surpasses $1bn | Lawyer Monthly of the False Claims Act. Karen Martinelli filed the action in the US District Court for the Northern District of Georgia in April 2019 on behalf of the United States.
Those provisions allow private individuals, known as relators, to pursue claims alleging fraud against federal programmes and potentially receive a share of money recovered by the government. Martinelli is expected to receive approximately $123,750, equivalent to 15% of the settlement amount.
The case illustrates why documentation surrounding durable medical equipment can create significant False Claims Act risk. The allegations did not centre on whether equipment physically reached beneficiaries, but on whether the claims submitted to Medicare were supported by medical necessity and proper physician prescriptions.
For healthcare suppliers, that distinction is important. Billing systems need to be capable of linking a reimbursement claim to the clinical and prescription records required by the relevant Medicare rules before payment is sought.
The settlement also shows how compliance exposure can extend beyond the corporate entity where government allegations concern conduct attributed directly to owners or senior management. Here, the agreement covers Crown Medical as well as Michelle and Philanzo King individually.
For legal and compliance teams, an effective control framework therefore needs to examine the complete path from physician order to claim submission. Medical-necessity documentation, prescription validity and coding should be checked before reimbursement is requested rather than treated solely as a retrospective audit issue.
The whistleblower mechanism adds another layer of risk. Employees, contractors and others with knowledge of alleged false claims may be able to initiate litigation on behalf of the government, meaning weaknesses in internal billing controls can develop into external enforcement even before regulators independently identify a problem.
The resolution was reached through a coordinated effort involving the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section and the US Attorney’s Office for the Northern District of Georgia.
For healthcare businesses, the Crown Medical settlement reinforces a straightforward compliance point: providing a medical product is not by itself sufficient to establish entitlement to federal reimbursement. The supporting medical and prescription requirements must also be satisfied and documented.