Kinex Medical Company, a medical equipment supplier based in Waukesha, Wisconsin, has agreed to pay $6.9 million to resolve allegations that it submitted false claims to federal healthcare programs including Medicare and TRICARE. The settlement follows an investigation prompted by a whistleblower complaint.
According to the U.S. Attorney’s Office for the Eastern District of Wisconsin, Kinex was accused of providing unnecessary medical braces to patients covered by Medicare, TRICARE, the Federal Employees Health Benefits Program (FEHBP), and the Office of Workers Compensation Programs (OWCP) between 2019 and 2024. Authorities allege that Kinex then billed these programs as if the braces were medically necessary. The company also allegedly encouraged patients to accept the braces by waiving co-pays and offering free equipment.
In addition to the financial settlement, Kinex entered into a Corporate Integrity Agreement with the Department of Health and Human Services’ Office of Inspector General (HHS-OIG) aimed at ensuring future compliance with 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.”
“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,” said Mario M. Pinto, Special Agent in Charge of HHS-OIG. “Our agency will continue to work closely with our law enforcement partners to hold suppliers accountable when they place profits ahead of patient need.”
“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,” said FBI Milwaukee Special Agent in Charge Alan Karr. “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.”
“This investigation underscores our commitment to preserving the integrity of the TRICARE program and protecting taxpayer-funded health benefits essential to military readiness,” said Special Agent-in-Charge Jason J. Sargenski of DCIS Southeast Field Office. “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.”
“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,” said Derek M. Holt, Special Agent in Charge at OPM-OIG. “We thank our agents and law enforcement partners for their work to hold these companies accountable.”
Because this case originated from a whistleblower under provisions allowing private citizens to report fraud against government programs (known as qui tam), that individual will receive part of the settlement amount.
The lawsuit remains pending as United States ex rel. Geboy v. Kinex Medical Company LLC (Case No. 24-cv-1461) in federal court for Eastern Wisconsin.
Assistant U.S Attorneys Nia Schmaltz and Michael Carter represented authorities during this process; several agencies assisted with investigations including HHS-OIG, FBI Milwaukee Division, OPM-OIG, DCIS Southeast Field Office, as well as U.S Postal Service OIG.
The government noted that these are allegations only; Kinex has not admitted liability.
