Medical device company Eargo has agreed to pay $34.37 million to resolve a federal false claims accusation. Eargo denies the government’s allegations, and the payment is not an admission of liability for the alleged behavior.
Eargo is a public company based in San Jose, California, that makes rechargeable and nearly invisible hearing aids. In the second quarter of 2022, the company boasted 44 percent year-over-year revenue growth, from $15.9 million in 2020 to $22.9 million in 2021. Excluding the government settlement, Eargo expects it will have $20-25 million in cash to burn each quarter and will need to raise funds in 2022, according to its earnings report.
Though the pandemic slowed hearing aid sales, the aging population will continue to make hearing aids a growing market that will recover quickly. Fortune Business Insights says that the hearing aid market was valued at $9.7. billion in 2021 and is expected to steadily increase to be a $17.68 billion market by 2029.
The investigation was a collaboration between the Justice Department’s Civil Division, Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Northern District of Texas. The government alleges that between 2017 and 2021, Eargo included unsupported diagnosis codes on claims for hearing aids that Eargo submitted to the Federal Employees Health Benefits Program, which is the largest employer-sponsored group health insurance in the world, providing benefits to 8 million federal...
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