Illinois-based LifeWatch Services has agreed to pay the federal government $18.5 million to settle a lawsuit that alleged the company violated the False Claims Act.

The Justice Department said that the independent diagnostic testing facility made improper claims to Medicare by billing for ambulatory cardiac telemetry (ACT) services for patients who had experienced only mild or moderate palpitations. LifeWatch was aware that these patients were not eligible for Medicare reimbursement but nonetheless submitted claims using a false diagnostic code, according to the DOJ.

ACT services, which are a form of cardiac event monitoring that use cell phone technology to record cardiac events in real time, were reimbursed at between $750 and $1200 during the time period in question.

In addition, two whistleblowers alleged that the company provided full-time employees to hospitals and medical practices at no charge. These services amounted to “kickbacks,” according to the Justice Department.

“False claims on federal health care programs drive up the costs of health care for all of us,” Stuart F. Delery, Acting Assistant Attorney General for the Civil Division of the Department of Justice, noted in a statement. “Today’s settlement furthers the Department of Justice’s commitment to making sure that those who benefit from Medicare play by the rules.”

Under the terms of the False Claims Act, the two whistleblowers – both LifeWatch Services employees – are entitled to receive a portion of the proceeds of the settlement. Former LifeWatch sales representatives Ryan Sims and Sara Collins will split approximately $3.4 million plus interest for their role in making the case against the company.

“The False Claims Act is a critical tool for weeding out fraud and protecting the taxpayers,” added United States Attorney Jenny A. Durkan, of the Western District of Washington. “We must ensure tax dollars go to intended programs, not to line the pockets of those who seek to cheat the programs.”

Since January 2009, the Justice Department has recovered more than $8.9 billion from companies that violated the False Claims Act.