U.S. Healthcare Supply and Oxford Diabetic Supply and the two owners and presidents of those companies, will pay more than $12.2 million to resolve allegations that they violated the federal False Claims Act by using a fictitious entity to make unsolicited telephone calls to Medicare beneficiaries in order to sell them durable medical equipment.

U.S. Healthcare Supply LLC, based in Milford, New Jersey, will pay more than $5 million, and Jon P. Letko, its owner and president, will pay more than $1 million.

His brother, Edward J. Letko, the owner and president of Oxford Diabetic Supply Inc., a medical equipment supplier that allegedly also participated in the scheme, will pay $6 million plus interest.

“Cold-calling people to sell them expensive medical equipment is prohibited for a reason —  unsuspecting patients shouldn’t be coerced into making medical decisions about devices and equipment – which they may not even need – on the basis of a sales pitch,” said U.S. Attorney Paul J. Fishman for the District of New Jersey.

The settlement resolves allegations that U.S. Healthcare Supply LLC and Oxford Diabetic Supply Inc. set up and controlled an entity called Diabetic Experts Inc., which they used to make unsolicited telephone calls to Medicare beneficiaries in order to sell them durable medical equipment.

The companies submitted claims to Medicare for the equipment that they sold based on these unsolicited calls.

This conduct violated the Medicare Anti-Solicitation Statute.