Kinex Medical Company, LLC, a medical equipment supplier based in Waukesha, Wisconsin, has agreed to pay $6.9 million to settle allegations that it submitted false claims to federal healthcare programs including Medicare and TRICARE. The settlement follows an investigation initiated by a whistleblower complaint under the False Claims Act.
Federal authorities allege that between 2019 and 2024, Kinex provided unnecessary medical braces to patients covered by Medicare, TRICARE, the Federal Employees Health Benefits Program (FEHBP), and the Office of Workers Compensation Programs (OWCP). The company is accused of billing these programs for braces that were not needed by patients and encouraging acceptance of the equipment by waiving patient co-pays and providing other free devices.
As part of the resolution, Kinex has entered into a Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) to ensure future compliance with federal regulations.
“Medicare, TRICARE, and other federal programs only pay for medical equipment that patients actually need,” said United States Attorney Schimel. “Kinex, however, induced patients to receive braces that neither the patients nor their doctors thought they needed, all in an effort to receive taxpayer money. This settlement imposes a significant penalty on Kinex and will make taxpayers whole for the company’s wrongdoing.”
Mario M. Pinto, Special Agent in Charge at HHS-OIG stated: “Billing taxpayers for medically unnecessary equipment and undermining program safeguards through improper waivers of patient cost sharing can distort medical decision making and erode trust in our healthcare system. Today’s settlement underscores our commitment to protecting federal healthcare programs and the patients they serve. Our agency will continue to work closely with our law enforcement partners to hold suppliers accountable when they place profits ahead of patient need.”
FBI Milwaukee Special Agent in Charge Alan Karr commented: “Kinex engaged in a scheme to defraud the American taxpayers. The agreement by Kinex to settle this matter and repay over $6.9 million demonstrates the breadth of their fraudulent activity. The FBI along with our partners will continue to aggressively pursue those who steal from the American people and those engaged in healthcare fraud schemes.”
Special Agent-in-Charge Jason J. Sargenski from DCIS added: “This investigation underscores our commitment to preserving the integrity of the TRICARE program and protecting taxpayer-funded health benefits essential to military readiness. Fraud that diverts resources from TRICARE undermines the care promised to service members, retirees, and their families. DCIS remains focused on advancing accountability and deterrence in support of the Department’s mission.”
Derek M. Holt from OPM-OIG also said: “Patients expect that the medical equipment received during their treatment is necessary for their care and recovery, not a means for medical companies to profit. We thank our agents and law enforcement partners for their work to hold these companies accountable.”
The case was brought forward under qui tam provisions allowing whistleblowers who report fraud against government programs or contracts to share in any recovery; accordingly, the whistleblower will receive part of this settlement amount.
Assistant United States Attorneys Nia Schmaltz and Michael Carter represented the government during this matter. Multiple agencies including HHS-OIG, FBI, OPM-OIG, DCIS, as well as United States Postal Service OIG contributed investigative assistance.
The settlement resolves allegations only; Kinex does not admit liability.
