Hearing Aid Company Eargo Inc. Agrees to Pay $34.37 Million to Settle Common Law and False Claims Act Allegations for Unsupported Diagnosis Codes

Hearing Aid Company Eargo Inc. Agrees to Pay $34.37 Million to Settle Common Law and False Claims Act Allegations for Unsupported Diagnosis Codes

Eargo Inc. (Eargo), a for-profit public corporation headquartered in California that sells and dispenses hearing aid devices directly to customers nationwide, has agreed to pay $34.37 million to resolve allegations that it submitted or caused the submission of claims for hearing aid devices for reimbursement to the Federal Employees Health Benefits Program (FEHBP) that contained unsupported hearing loss diagnosis codes.

The FEHBP, administered by the U.S. Office of Personnel Management (OPM), is the largest employer-sponsored group health insurance program in the world. It provides health benefits through various health insurance carriers and covers over eight million federal employees, retirees, former employees, family members and former spouses. Certain FEHBP health insurance plans elect to offer a hearing aid benefit, which varies from plan to plan. FEHBP carriers that offer a hearing aid benefit require that claims for hearing aid devices include a hearing loss-related diagnosis code. These diagnosis codes must be supported by a hearing loss diagnosis, which is typically based on a hearing test performed by a health care provider.

“The FEHBP plays a vital role in ensuring the health and wellbeing of our nation’s dedicated civil servants and their families,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department of Justice is committed to the integrity of this program and will pursue appropriate remedies against providers who misuse it.”

“Public servants rely on the FEHBP to keep their families healthy,” said U.S. Attorney Chad E. Meacham for the Northern District of Texas. “Billing the program for medical devices patients may not need raises costs across the board. We are proud to hold Eargo accountable for its alleged use of unsupported diagnosis codes.”

“Submitting unsupported claims to the FEHBP, knowingly and otherwise, harms the American taxpayer,” said Deputy Inspector General Norbert E. Vint of OPM Office of the Inspector General (OPM-OIG). “I am incredibly grateful to our investigative staff and partners at the Department of Justice for their unwavering commitment to protecting the integrity of the FEHBP and preserving the trust fund for the health care of our nation’s dedicated civil servants.”

The United States alleged that, from Jan. 1, 2017, through Jan. 31, 2021, Eargo included unsupported hearing loss-related diagnosis codes on claims for hearing aid devices that Eargo submitted to the FEHBP and on invoices — called superbills — that Eargo provided to FEHBP beneficiaries to obtain reimbursement for such devices from the FEHBP. The United States further alleged that between Feb. 1, 2021, and Sept. 22, 2021, Eargo continued to include these unsupported hearing loss-related diagnosis codes on claims and superbills — even after completing an internal review of its billing and coding practices in January 2021 — resulting in Eargo knowingly submitting or causing the submission of false claims for payment to the FEHBP.

The resolution obtained in this matter was the result of a coordinated effort between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of Texas, with assistance from OPM-OIG.

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement, can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The matter was handled by Fraud Section Trial Attorney Samuel Lehman and Assistant U.S. Attorney Kenneth Coffin for the Northern District of Texas.

The claims settled by this agreement are allegations only and there has been no determination of liability.

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