Troy Sleep Specialists Pay $ 764,000 to Settle False Claims Act Lawsuit

Medicaid continues to be the white collar fraudsters preferred playground.  Amy Kreiner and Kayla Terbush filed a False Claims Act lawsuit against Troy Sleep Center PLC, Care One Medical Equipment and Supplies, Inc., Michel Alkhalil, M.D., and Peggy Rahal, M.D. on April 23, 2024.  The Feds took over the case on January 6th and annnounced a settlement on Friday:

https://www.justice.gov/usao-edmi/pr/oakland-county-sleep-specialists-agree-pay-76395474-settle-false-claims-act

OAKLAND COUNTY SLEEP SPECIALISTS AGREE TO PAY $763,954.74 TO SETTLE FALSE CLAIMS ACT ALLEGATIONS
Friday, February 6, 2026
For Immediate Release
U.S. Attorney's Office, Eastern District of Michigan

DETROIT - United States Attorney Jerome F. Gorgon Jr. announced today that Troy Sleep Center PLC, Care One Medical Equipment and Supplies, Inc., Michel Alkhalil, M.D., and Peggy Rahal, M.D., have agreed to pay a total of $763,954.74 to the United States and the State of Michigan to resolve allegations that they violated the False Claims Act.

Troy Sleep Center PLC (“TSC”) provides medical services for persons experiencing sleep disorders, including persons enrolled in healthcare programs funded by federal and state governments. Care One Medical Equipment and Supplies, Inc. (“Care One”) provides medical supplies for individuals experiencing sleep disorders, including individuals enrolled in healthcare programs funded by federal and state governments. Dr. Alkhalil and Dr. Rahal are co-owners/members of TSC, while Dr. Rahal owns Care One.

The settlement announced today resolves three sets of allegations. First, from January 1, 2018, through December 31, 2024, TSC, Dr. Alkhalil, and Dr. Rahal improperly billed federal healthcare programs for sleep studies administered without properly trained and certified sleep technicians, as required by federal regulations. Second, TSC, Dr. Alkhalil, and Dr. Rahal obtained $480,000 in Paycheck Protection Program loans while engaged in the alleged improper billing. Third, from January 1, 2018, through May 31, 2024, Care One improperly billed Medicaid for accessories to positive airway pressure (“PAP”) machines, which Medicaid does not permit to be charged separately from the rental rate of PAP machines.

“Billing federal health care programs for services that do not meet required standards compromises patient care and erodes public trust,” said Mario M. Pinto, Special Agent in Charge at the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Together with our law enforcement partners, we remain steadfast in our commitment to identify and stop fraud that threatens patient well-being and misuses taxpayer dollars.”

The civil settlement includes the resolution of claims brought under a qui tam or whistleblower lawsuit under the False Claims Act: United States ex rel. Kreiner v. Troy Sleep Center PLC, case no. 24-11073, (E.D. Mich.). Under the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of any recovery.

The resolution obtained in this matter was the result of a coordinated effort among the United States Attorney’s Office for the Eastern District of Michigan, the Michigan Attorney General’s Health Care Fraud Division, and the U.S. Department of Health and Human Services - Office of the Inspector General. The matter was handled by Assistant United States Attorneys John Postulka and Gregory Dickinson from the U.S. Attorney’s Office for the Eastern District of Michigan.

The investigation and resolution of this matter illustrates the government’s emphasis on combating health care fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the U.S. Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The claims resolved by the settlement are allegations only; there has been no determination of liability.

The U.S. Senate only confirmed Detroit native Jerome Gorgon as U.S. Attorney for the Eastern District of Michigan in December.  This case languished, waiting on the Senate so the defendants could not pull a Letitia James and get the prosecutor removed.