The feds claim a Malvern firm signed patients up for costly, unnecessary heart monitoring. Now it must pay $14.7 million.

A Malvern-based supplier of heart-monitoring devices is paying $14.7 million to settle allegations that it signed up patients for round-the-clock, real-time analysis of their heart rhythms despite doctors saying it was medically unnecessary.

By steering patients toward this enhanced service, BioTelemetry Inc. and its subsidiary, LifeWatch Services, were able to bill Medicare and other federal insurers at least five times as much as what the appropriate level of service would have cost, U.S. attorneys said.

The companies, now owned by Amsterdam-based Royal Philips NV, were accused of inflating insurance costs for patients at 90 hospitals and cardiology clinics nationwide by engaging in this improper practice from 2014 to 2020. These patients were not seriously ill and did not need costly, real-time analysis, and instead required only periodic review of their heart recordings to detect any occasional disturbances in cardiac rhythm, the Justice Department alleged.

Philips and the subsidiaries made no admission of liability in the December settlement agreement. In a statement, a Philips spokesperson characterized the claims as “legacy allegations,” as they involved a time period before Philips finalized its $2.4 billion purchase of BioTelemetry, in 2021.

“BioTelemetry and LifeWatch deny the allegations and have agreed to settle the claims without any admission of liability for a total amount of approximately $14.7 million to avoid the delay, uncertainty, and expense of litigation,” Philips said.

The allegations involved a heart monitor that was sold as LifeWatch ACT-3L, among other names. When the staff at cardiology clinics enrolled patients in the company’s online portal, the software’s default setting enrolled them in the more expensive real-time monitoring, regardless of what the cardiologist had requested, the government’s attorneys alleged.

Even when clinic staff tried to change the setting, the company’s sales personnel instructed clinic staff to pick the more expensive option in violation of the False Claims Act, the government alleged.

The settlement marked the second time that Philips has agreed to pay the government millions to resolve allegations against BioTelemetry.

In December 2022, the corporation paid $44.9 million to settle claims that BioTelemetry had outsourced the analysis of patients’ heart monitor recordings to a company in India, in many cases by unqualified technicians. The patients were insured by Medicare and other government insurers, which are prohibited from paying for services furnished outside the U.S.

Both cases were initiated by whistleblowers, meaning they receive a portion of the settlement money. The outsourcing case was filed by two former BioTelemetry employees. The new $14.7 million case was brought by an employee of a New Jersey hospital, who stands to collect $2.3 million, and several other outside parties, who will split $270,000.

Medicare’s reimbursement rates for the various levels of heart monitoring have changed over the years. During the period covered by the allegations, the real-time analysis of heart rhythms was billed to Medicare at $1,100, whereas the periodic “event” monitoring that doctors ordered was billed at only $200.

The case was handled by the Justice Department’s Civil Division and the U.S. Attorneys’ Offices for the District of New Jersey and the Eastern District of Pennsylvania, along with investigators for various federal health agencies.

“Companies that bill Medicare and other federal health-care programs must ensure that they are billing for the services actually ordered by medical providers, rather than the most expensive service,” said Jacqueline C. Romero, U.S. Attorney for the Eastern District of Pennsylvania.