AmMed Direct fined $18M in bait-and-switch marketing scheme

Diabetic supply firm AmMed Direct will pay an $18 million penalty to settle government claims that it wrongly billed Medicare for diabetes testing supplies and other products in a bait-and-switch scheme.

Most of the money — $17.6 million — will go to the U.S. government with the state of Tennessee getting $439,003 as part of the civil settlement.

The penalties, which also include a $2.8 million payment to a whistleblower in the long-running dispute, were revealed Friday by the U.S. Attorney’s Office.

Federal authorities say Nashville-based AmMed ran a marketing scheme from 2008 through early 2010 through which it advertised free cookbooks, without any mention of Medicare supplies, to induce Medicare customers to call AmMed or its telemarketing sales team.