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SCV Firm To Pay $5 Million To Settle Federal Charge Of Overbilling For Adult Diapers

logo-shield-healthcareBy Leon Worden,

[Shield Healthcare] - Santa Clarita-based Shield Healthcare announced today that it has reached a settlement with the U.S. Department of Justice over the company’s compliance during 2003 with California’s Upper Billing Limit regulation, which requires that providers bill Medi-Cal no more than double net purchase price. Shield agreed to pay a sum of $5 million to settle the case.

The 2003 Upper Billing Limit regulation was criticized at the time it was issued for being vague and was subsequently clarified in 2004. Shield maintains there was no wrongdoing in this situation and the settlement does not include any admission of violations. Company leadership wants to remain focused on more pressing business matters.


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According to the U.S. Attorney's office, the lawsuit alleged that Shield -- the largest supplier to the state of incontinence supplies, such as adult diapers and waterproof sheeting -- submitted false claims in violation of a regulation designed to eliminate excessive markups charged to the Medi-Cal program.

"The company allegedly evaded the regulation's upper billing limit, which requires that providers bill Medi-Cal no more than double their net purchase price," justice officials said in a statement. The federal government will receive $2 million of the settlement and $3 million will go to California because both fund the Medi-Cal program, officials said.

“We are in full compliance with Medi-Cal regulations today and have been since the Upper Billing Limit regulation was modified in 2004,” said Laura McIlvaine, Vice President of Government Affairs for Shield. “Shield Healthcare is a model corporate citizen and we conduct our business in full compliance with governing regulations.”

Shield began working with Medi-Cal to clarify the regulation requirements shortly after it was introduced in 2003. Based on guidance received from Medi-Cal, Shield acted on the belief that the ambiguous regulations would be amended and focused on compliance with the amended version.

“The Department of Justice has taken the position that, despite receiving assurance from Medi-Cal, Shield Healthcare’s practices in 2003 resulted in overpayments,” said McIlvaine. “While we disagree with their position, Shield has urgent needs to address and we made a decision to settle this matter so that we can get back to the business of taking care of our customers nationwide.”

About Shield Healthcare

Since 1957, Shield HealthCare has been helping people with a need for disposable medical products live comfortably at home. Shield HealthCare is dedicated to fulfilling the medical supply needs of consumers and the caregiving community with a focus on customer satisfaction. For more information, please visit .