Texas company connected to alleged scheme that billed Medicare $3 billion for urinary catheters
DALLAS – When 72-year-old Tom England received his Medicare statement in the mail, he immediately sensed something was wrong.
The mysterious company Konaniah Medical Supplies, with a listed address in Grand Prairie, Texas, had charged his Medicare account over $8,000 for urinary catheters. England said he had never ordered, received, or needed catheters.
"This was not a mistake," England suspected. "I thought I can't be the only one. There have to be many, many more victims."
The Dallas Better Business Bureau (BBB) noticed a surge in complaints related to Konaniah Medical Supplies starting in the summer of 2023. The pattern was strikingly similar: wrongful billing of Medicare for urinary catheters that were never ordered and often never received.
"Consumers are coming back and saying they've tried to contact the company but there's no phone number to reach them or website," explained BBB investigator Erica Munoz.
According to a review of Medicare data by the National Association of Accountable Care Organizations (ACOs), last year Konaniah Medical Supplies billed Medicare a staggering $202 million for catheters. To put this in perspective, that's nearly $50 million more than what Medicare paid out for catheters to all medical providers combined in 2021.
Digging deeper, according to Texas Secretary of State business filings, Konaniah Medical Supplies also operates under the name G&I Ortho Supply with the listed address in Brooklyn, New York. G&I Ortho billed Medicare an astonishing $436 million for catheters.
The scope of this alleged fraud extends beyond Konaniah and G&I Ortho. The National Association of Accountable Care Organizations (ACOs) identified ten medical supply companies that collectively charged Medicare over $3 billion for catheters. Remarkably, most of these companies didn't even exist two years ago, yet they caused a nearly 2,000% increase Medicare billings for catheters.
U.S. Senator Mike Braun from Indiana expressed disbelief: "That didn't catch someone's attention? I mean, that would be statistically so easy to pick up by anyone's normal audit procedure."
He has called for a full federal audit of Medicare, emphasizing that American taxpayers deserve transparency. The audit is scheduled to begin in July.
A spokesperson for the Centers for Medicare & Medicaid Services (CMS) said in 2023, CMS identified a concerning rise in urinary catheter billings and pinpointed 11 suppliers responsible for 89% of all catheter claims between January 1, 2023, and March 11, 2024. CMS promptly suspended Medicare payments to these suppliers. While most claims made it through Medicare's payment system checks and were considered "payable," most of the actual payments were ultimately withheld, according to a CMS spokesperson. However, CMS has not revealed how much of the more than $ 3 billion in suspected fraudulent billings were paid.
The property manager at the Grand Prairie office complex, where Konaniah's listed headquarters were located, confirmed that the company vanished six months ago after ceasing rent payments. Prior to the company skipping out on rent, the property manager rarely saw anyone or any medical supplies at the small two-room office.
CBS News New York visited the G&I Ortho Supply's listed address in Brooklyn, only to find no signs of activity.
Senator Braun filed a bill earlier this year aimed at preventing Medicare fraud by leveraging artificial intelligence to detect potential billing irregularities.
"If we have the tools, I say bring it on," England said upon learning of Senator Braun's bill. "I don't like fraud. I don't like people committing fraud on others, especially when it's my tax dollars."
