Waukesha Medical Company to Pay $6.9 Million in False Claims Settlement

Federal investigators have announced that Waukesha-based Kinex Medical Company has agreed to pay $6.9 million to resolve allegations that it violated the False Claims Act by submitting fraudulent claims to multiple federal healthcare programs over a five-year period.

The settlement, announced this week by the U.S. Attorney’s Office for the Eastern District of Wisconsin, comes after a whistleblower alerted authorities to potential improprieties in the company’s billing practices. According to federal officials, Kinex—which specializes in the distribution of durable medical equipment such as knee, shoulder, and hip braces nationwide—engaged in a pattern of submitting claims for unnecessary medical devices.

Investigators allege that from 2019 through 2024, Kinex provided patients covered by Medicare, TRICARE, the Federal Employees Health Benefits Program (FEHBP), and the Department of Labor’s Office of Workers Compensation Programs (OWCP) with medical braces they did not medically require. The company then allegedly billed these federal programs as though the devices were medically necessary.

“Protecting the integrity of federal healthcare programs and ensuring taxpayer dollars are properly spent remains a top priority,” said a spokesperson for the U.S. Attorney’s Office who requested anonymity because they weren’t authorized to speak publicly about the case. “Companies that provide unnecessary medical equipment not only waste valuable resources but potentially compromise patient care.”

The investigation revealed that Kinex allegedly employed questionable marketing tactics to convince patients to accept unneeded braces. According to government officials, the company routinely waived required patient co-payments and offered additional medical equipment at no cost as incentives—practices that violate federal healthcare regulations designed to prevent unnecessary utilization of medical resources.

The durable medical equipment (DME) industry has been under increased scrutiny in recent years. According to healthcare compliance experts, DME fraud costs federal healthcare programs billions annually, with braces and mobility devices being particularly problematic categories. The Department of Health and Human Services has identified DME fraud as a significant area of concern, particularly as the aging population increases demand for such equipment.

As part of the resolution, Kinex has entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services’ Office of the Inspector General (HHS-OIG). Such agreements typically require companies to establish comprehensive compliance programs, undergo regular audits, and implement training initiatives to prevent future violations. The agreement will likely mandate strict oversight of Kinex’s operations for several years.

The $6,925,000 settlement represents a significant financial penalty for the Wisconsin-based company, though federal authorities have not disclosed what portion of this amount may be awarded to the whistleblower whose information initiated the investigation. Under the False Claims Act, whistleblowers can receive between 15% and 30% of recovered funds when providing original information about fraud against government programs.

Healthcare fraud experts note that this case highlights the critical role whistleblowers play in identifying potential fraud in the healthcare system, particularly in areas where billing practices can be complex and difficult for regulators to monitor consistently.

Neither Kinex nor its legal representatives have issued public statements regarding the settlement at this time. The company, which will continue operations under the terms of the integrity agreement, has not admitted liability as part of the settlement—a common provision in such resolutions.

Federal officials emphasized that the settlement demonstrates the government’s ongoing commitment to combating healthcare fraud and protecting the financial viability of programs serving vulnerable populations, including the elderly and military veterans.