by Peter Elkind
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For Lincare, paying multimillion-dollar legal settlements is an integral part of doing business.
The company, the largest distributor of home oxygen equipment in the United States, admitted billing Medicare for ventilators it knew customers weren’t using (2024) and overcharging Medicare and thousands of elderly patients (2023). It settled allegations of violating a law against kickbacks (2018) and charging Medicare for patients who had died (2017). The company resolved lawsuits alleging a “nationwide scheme to pay physicians kickbacks to refer their patients to Lincare” (2006) and that it falsified claims that its customers needed oxygen (2001). (Lincare admitted wrongdoing in only the two most recent settlements.)
Such a litany of Medicare-related misconduct might be expected to provoke drastic action from the Department of Health and Human Services, which oversees the federal health insurance program that covers 1 in 6 Americans. Given that most of Lincare’s estimated $2.4 billion in annual revenues are paid by Medicare, HHS wields tremendous power over the company.
Sure enough, as part of the 2023 settlement, HHS placed Lincare on the agency’s equivalent of probation, a so-called corporate integrity agreement. The foreboding-sounding document includes a “death penalty” provision: Any “material breach” of the probation agreement, which runs for five years, “constitutes an independent basis for Lincare’s exclusion from participation in the Federal health care programs.” Such a ban could effectively kill Lincare’s business.
That sounds dire. Except that before that corporate integrity agreement was signed in 2023, Lincare was under the same form of probation, with the same death penalty provision, from 2018 to 2023, and violated its terms. From 2006 to 2011, Lincare was similarly on probation and also violated the terms, according to the government. And before that — well, you get the picture. Lincare has been on probation four times since 2001. And despite a pattern not only of fraud, but of breaking its probation agreements, Lincare has never been required to do more than pay settlements that amount to pennies relative to its profits.
This is not an aberration. While HHS routinely imposes the death penalty on small operations, it has never barred a national Medicare supplier like Lincare from continuing to do business with the government. Some companies, it seems, are too big to ban.
Lincare’s lengthy record of misbehavior isn’t a surprise to people in the medical equipment business. What is surprising is the federal government’s willingness to pull its punches with a company that has fleeced taxpayers and elderly customers again and again.
Federal officials have never pursued the company executives who oversee this behavior even though two of them, Chief Operating Officer Greg McCarthy and Chief Compliance Officer Jenna Pedersen, have worked at Lincare through all four of the company’s probationary periods. No one has faced criminal charges for activity the government’s own investigators deemed fraud.
Medicare has continued to pay Lincare billions even as many of the company’s customers revile it. Evaluations on customer-review websites are lacerating, and complaints to state attorneys general abound. On the Better Business Bureau’s website, 888 reviewers gave Lincare an average score of 1.3 out of 5. They cite dirty and broken equipment, charges that continue even after equipment has been returned, harassing sales and collection calls, and nightmarish customer service. As one person wrote in April, Lincare is “running a scam where they have guaranteed income” and “the customer can’t do a thing.”
Bauer’s oxygen concentrator and Lincare’s Libby, Montana, storefront. The company has 1.8 million customers in 48 states. (Rebecca Stumpf, special to ProPublica)HHS has always been reluctant to cut off big suppliers. Medicare’s first objective is to make sure nothing interrupts the flow of medications, devices and services to beneficiaries. And were HHS to seek to ban Lincare, the company would surely launch a long, costly legal war. But even if the cost of such combat reached many millions of dollars, it would still be a tiny fraction of the amount lost to fraud, which is yet another contributor to the soaring medical costs that bedevil the country. “This is taxpayer money,” said Jerry Martin, a former U.S. attorney who represented an ex-Lincare executive in a whistleblower suit against the company. “We need to pay people that don’t have four corporate-integrity agreements.”
Weak enforcement is not the only problem. Lincare is paid to rent oxygen equipment to patients, with HHS covering most of the monthly bills. But those rental fees often add up to many times what it would cost simply to buy the equipment. “If this were a rational country,” Bruce Vladeck, who ran Medicare from 1993 to 1997, told ProPublica, “the government would buy a million [oxygen] concentrators and pay Amazon or somebody to deliver them.”
In a seven-month investigation, ProPublica examined how Medicare’s largest provider of home medical equipment has managed to take advantage of its customers for a quarter of a century while fending off meaningful enforcement. ProPublica interviewed more than 60 current and former employees and executives, Medicare and Justice Department officials, patient advocates, and health care experts. ProPublica also reviewed dozens of court cases involving Lincare and thousands of pages of internal company documents, sales presentations and emails.
The investigation reveals a dismal picture of a company with a sales culture that depends on squeezing infirm and elderly patients and the government for every penny. Lincare employees are pressured to sell — whether a customer needs a product or not — on pain of losing their jobs.
And the company’s record of misbehavior and conflict extends far beyond its sales and billing practices. Lincare has paid $9.5 million in settlements for data breaches and mishandling patient and employee records. It has faced claims of violating wage rules, harassing customers with sales and collection calls, and tolerating racist comments to an African American employee. (Lincare lost the latter suit at trial and is appealing.) The company has repeatedly sparred in court with former executives, including a 2017 suit in which longtime executive Sharon Ford claimed that the company had cheated her out of a $1 million bonus. (A judge ruled in favor of Ford at trial before the case was overturned on appeal.) Ford testified that Lincare had earned an industry reputation as “The Evil Empire.” And when Lincare’s CEO, Crispin Teufel, resigned last year to become CEO of a rival company, Lincare sued him for breach of contract and misappropriating trade secrets. Teufel ultimately admitted to downloading confidential company records and was blocked from taking the new job. (Teufel did not respond to requests for comment. His replacement, Jeff Barnhard, took over as Lincare’s CEO in July 2023.)
Lincare declined multiple requests to make executives available for interviews. After ProPublica provided a lengthy document listing........