Brain Health Scan Company Founder Settles False Claims Act Whistleblower Lawsuit

The co-founder of a New York-based company that purported to provide brain health scans (EEGs) for early detection of cognitive impairments has agreed to pay $220,000 to resolve allegations he violated the False Claims Act. The company, Evoke Neuroscience Inc., also will pay $225,000.

According to the U.S. Department of Justice, David Hagedorn, Evoke’s co-founder and CEO caused the submission of false claims by physicians using his brain health device by promoting false billing codes. Hagedorn, a psychologist, sold its eVox device mostly to general practitioners. It requires a 20-to 60-minute in-office application of a helmet with electrodes that claims to test for certain brain functions. When he launched the company in 2009, Hagedorn selected six false billing codes for use of the device.

Promoting the Use of False Billing Codes

The settlement resolves allegations that between Jan. 1, 2013 and May 31, 2021, Hagedorn and his company promoted those false billing codes to healthcare providers who were using the device. By using those codes, in violation of the False Claims Act, the providers were submitting false claims for Medicare reimbursement.

“There is no ‘startup’ exception under the False Claims Act,†said U.S. Attorney Romero. “You will be held accountable if you knowingly promote false billing codes to others.†

The government found that none of the codes were appropriate for the eVox device as applied because the codes require a longer testing time, a specialized environment (soundproof/darkroom), and can only be administered by a relevant specialist. Moreover, the lawsuit contended that Evoke and Dr. Hagedorn improperly encouraged healthcare providers to bill multiple codes for a single application of the eVox device, a clear violation of the False Claims Act.

Settlement Resolves Whistleblower Claims

The settlement was the result of a whistleblower lawsuit brought by a Mississippi pain management specialist Dr. Kevin Vance and Angel Vance, a nurse to whom the device was marketed. They will receive $89,000 of the settlement proceeds.

The qui tam False Claims Act suit was initially filed in the United States District Court for the Southern District of Mississippi, and was transferred to the Eastern District of Pennsylvania, where the U.S Attorney’s Office had previously settled a False Claims Act case with a local provider involving, among other things, use of eVox.

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