U.S. attorneys settle whistleblower fraud case for $27M

U.S. attorneys have reached a $27 million settlement with Rickey Kanter over allegations of Medicare mail fraud. In the case, focused on fraudulently billed diabetic shoe inserts, two former employees stand to receive nearly $5 million of that settlement for blowing the whistle, according to the Milwaukee Business Journal.

The government charges that Kanter, former CEO of Rikco International in Mequon, Wis., sold diabetic shoe inserts, and fraudulently billed Medicare for them, under the business name "Dr. Comfort," from 2004 through 2006. The surprising part: He continued to sell the products, and bill Medicare for them, after Medicare regulators warned him they did not qualify for reimbursement, the Journal reports.

He agreed to plead guilty to mail fraud and could serve up to 18 months in prison.

Interestingly, the charges didn't seem to bother San Diego orthotics company DJO Global Inc., which bought Rikco International, and the Dr. Comfort brand, last month for nearly $255 million, according to company statements. DJO spokesman Mark Francois told the Milwaukee Journal Sentinel that Kanter's settlement was a condition of the sale, and added that Rikco International has worked with regulators to fix the problem in the intervening years, making the Dr. Comfort brand viable for DJO.

For more:
- read the Milwaukee Journal Sentinel article
- read the Milwaukee Business Journal article 1 and article 2
- check out the DJO Global press release