He was sentenced to over a year in prison and ordered to pay restitution for manually removing foam from recalled devices and billing them to Medicaid as new.

Key takeaways:

Sleep physician Eric Edward Haeger received a one-year-and-a-day prison sentence, a $60,000 fine, and over $349,000 in restitution for adulterating medical devices.
Haeger purchased over 500 recalled CPAP and BiPAP devices, directed staff to manually remove the sound abatement foam, and distributed them to Medicaid patients.
His clinic billed the altered, used devices to Medicaid as new equipment, collecting more than $439,000 in fraudulent payments.

On March 25, United States District Court Judge Rebecca L. Pennell sentenced sleep physician Eric Edward Haeger, 57, of Central Washington Sleep Diagnostic Center, to one year and a day in federal prison followed by a one-year term of supervised release. Haeger pleaded guilty to adulterating and misbranding medical devices with the intent to defraud or mislead. He was also sentenced to pay a $60,000 fine and $349,272.79 in restitution.

The case centers around the June 2021 Philips Respironics class I recall of certain CPAP and BiPAP devices, which was initiated due to potential health risks associated with the foam used for sound abatement.

According to court documents, between July 2021 and July 2023, Haeger purchased over 500 used and recalled CPAP and BiPAP devices through online resellers. Haeger and others, at his direction, including his children, opened the devices and attempted to remove the foam using screwdrivers, hooks, and other tools. This conduct occurred in locations that were not designed or operated as clean rooms for manufacturing medical devices.

Haeger and staff at his sleep clinic then provided the used, recalled, and adulterated devices to Washington state Medicaid patients. Clinic staff, under Haeger’s direction, billed Medicaid for the devices with the false representation that they were new and in good working order.

At sentencing, the court concluded that Haeger adulterated and provided 440 devices to patients, which were billed to Medicaid for over $600,000. Of that amount, $439,272.79 was paid to Haeger. The US government argued that the altered devices presented potential harm to patients by increasing the risk of inhaling harmful particulates and causing overheating risks due to deviations from the FDA-approved design.

In delivering the sentence, Pennell noted that Haeger’s conduct was ongoing and extensive, created significant contamination concerns for his patients, and undermined confidence in medical professionals.

“Dr Haeger violated the trust of his patients who were misled into believing Dr Haeger was providing them with safe and reliable medical equipment,” says Pete Serrano, first assistant US attorney, in a release. “Instead, Dr Haeger devised an extensive scheme to defraud his patients and Medicaid, prioritizing profit over patient health and safety. Conduct that puts profits over patients is egregious, and my office will continue to prosecute such cases.”

“Putting recalled and unsafe medical devices into the hands of vulnerable patients is an egregious violation of the trust our healthcare system relies on,” says Robb Breeden, special agent in charge of the Pacific area regional office for the US Department of Health and Human Services, Office of Inspector General, in a release. “Patients deserve to know that the equipment they depend on is safe and effective—not secretly refurbished, adulterated, or contaminated. Our investigation underscores a simple truth: when providers put profits ahead of patient safety, we will hold them accountable.”

“As a physician, Dr Haeger knew he had a responsibility to act in the best interest of patients who trusted him with their health,” says W. Mike Herrington, special agent in charge of the FBI Seattle field office, in a release. “Instead, he risked the safety of hundreds of Medicaid patients by issuing them recalled medical devices he had tampered with, then fraudulently billing Medicaid representing the machines as new.”

The case was investigated by the FDA Office of Criminal Investigations, the Washington State Medicaid Fraud Control Division, the Health and Human Services Office of the Inspector General, and the FBI.