WASHINGTON, DC – September 21, 2026 (STL.News) Crown Medical Solutions LLC and its two owners have agreed to pay the federal government $825,000 to resolve allegations that the California medical equipment supplier submitted false Medicare claims for braces and other equipment that federal officials contend was medically unnecessary, improperly prescribed, or both.
The civil settlement resolves False Claims Act allegations against Crown Medical and its owners, Michelle R. Boardingham King and Philanzo D. King, stemming from Medicare billings between Nov. 1, 2017, and April 30, 2019.
The U.S. Department of Justice announced the settlement Monday.
The underlying 18-page settlement agreement reveals far more about the case than the government’s announcement, including Crown Medical’s ownership structure, an extended payment plan, security requirements to protect the government’s recovery, and a potentially significant $37.9 million bankruptcy provision.
The settlement is based on the defendants’ ability to pay, the Justice Department said.
Importantly, the resolution is a civil settlement of allegations. The government states that the claims resolved through the agreement are allegations only, and no liability has been determined.
Government Alleged False Medicare Claims
Crown Medical operated as a durable medical equipment supplier from Lemon Grove, California.
According to the settlement agreement, the company supplied durable medical equipment to Medicare beneficiaries until it ceased operations in April 2019.
Federal officials alleged that Crown Medical and its owners knowingly submitted or caused false claims to be submitted to Medicare for durable medical equipment orders that were medically unnecessary, not properly prescribed by a physician or both.
The equipment included knee braces, back braces, and heel stabilizers.
The settlement agreement identifies seven Healthcare Common Procedure Coding System, or HCPCS, codes involved in the government’s allegations: L1851, L0650, L3960, L1971, L3916, L2397 and L3170.
Those codes cover different types of orthotic equipment and related components.
The government identified the period of alleged conduct as beginning Nov. 1, 2017, and continuing through April 30, 2019.
Crown Medical ceased operations in April 2019, according to the settlement agreement.
“The Department of Justice is committed to fighting healthcare fraud and holding accountable those who exploit federal healthcare programs for personal profit,” Assistant Attorney General Brett A. Shumate of the Justice Department’s Civil Division said in announcing the settlement.
Husband-and-Wife Owners Controlled Crown Medical
The settlement provides additional information about Crown Medical’s ownership.
Michelle King served as the company’s president and chief executive officer during the period covered by the agreement and owned 50% of Crown Medical.
Philanzo King served as vice president and owned the remaining 50%.
The settlement identifies both as residents of Chula Vista, California.
Federal provider records identify Crown Medical Solutions LLC as a durable medical equipment and medical supplies organization with an address at 2741 Lemon Grove Ave. in Lemon Grove. Its National Provider Identifier was issued in January 2018, with Michelle King listed as the organization’s authorized official.
The company therefore appears to have had a relatively short operating history as an enrolled medical equipment provider before ceasing operations in April 2019.
Whistleblower Filed Case in 2019
The federal case originated with whistleblower Karen Martinelli.
Martinelli filed a lawsuit April 11, 2019, in the U.S. District Court for the Northern District of Georgia under the False Claims Act’s qui tam provisions.
The case is United States ex rel. Martinelli v. Crown Medical Solutions, LLC, et al., Case No. 1:19-cv-01660.
The False Claims Act allows private individuals with information about alleged fraud against the government to file lawsuits on behalf of the United States. These individuals, known as relators or whistleblowers, can receive a portion of the money the government recovers.
Martinelli will receive 15% of payments collected under the Crown Medical settlement.
If the government collects the entire $825,000 principal settlement amount, her share is expected to total about $123,750.
The structure means the whistleblower’s payments are tied to money the United States actually receives, rather than the government immediately paying the full $123,750 upon execution of the settlement.
$825,000 Will Be Paid Over Time
Crown Medical and its owners are not paying the entire $825,000 settlement immediately.
Under the agreement, the defendants must make an initial payment of $25,000 within 10 days of the settlement’s effective date.
The remaining $800,000 is to be paid through Dec. 31, 2028.
That balance carries interest at 4.25% annually, meaning the total amount ultimately paid will exceed the $825,000 principal settlement figure if the scheduled payments continue over the full period.
The agreement also makes each defendant jointly and severally liable for the settlement amount.
That is significant because the government’s recovery is not limited solely to Crown Medical as a corporate entity. Michelle and Philanzo King are individual parties to the agreement and share liability for the settlement obligation.
The agreement also requires what it describes as the “fullest security possible” for amounts owed during the payment period.
The collateral specifically identified includes property at 3600 Main St. in San Diego. The defendants must provide liens or other security instruments acceptable to the government.
If Crown Medical, its owners, or affiliated entities are sold, merged, or transferred under circumstances specified in the agreement before the balance is paid, the remaining settlement payments can be accelerated and become immediately due.
Settlement Was Based on Ability to Pay
One of the most consequential aspects of the agreement is the reason the government accepted $825,000.
The Justice Department says the settlement reflected the defendants’ ability to pay.
The agreement is even more explicit, stating that $825,000 represents the amount the United States was willing to accept in compromise of its civil claims “due solely” to the defendants’ financial condition.
Before reaching the settlement, the defendants provided the government with sworn financial disclosures and supporting documentation.
The United States relied on those disclosures when determining the settlement.
The agreement contains substantial protections if those financial representations prove materially incomplete or inaccurate.
If the government later discovers undisclosed assets or a false statement that changes the estimated net worth disclosed by at least $50,000, it can potentially rescind the settlement and reinstate litigation or seek additional recovery tied to previously undisclosed assets.
Agreement Contains $37.9 Million Bankruptcy Provision
An especially notable provision appears deep in the settlement agreement and was not highlighted in the Justice Department’s announcement.
If certain bankruptcy, insolvency, or similar proceedings occur before the settlement is paid in full, the agreement states that the United States may rescind the releases provided to the defendants.
Under those circumstances, the defendants acknowledge that the government would have an “undisputed, noncontingent, and liquidated allowed claim” of $37,942,636, less qualifying payments already received under the settlement.
That figure is dramatically larger than the $825,000 settlement.
However, the distinction is critical.
The $37.9 million figure is contained in a contractual provision addressing what would happen under specified bankruptcy or insolvency circumstances. It should not be interpreted as a court judgment, a present payment obligation, an admission by the defendants that they caused $37.9 million in losses, or an independent judicial determination of damages.
The operative settlement obligation remains $825,000 plus applicable interest so long as the defendants comply with the agreement.
Still, the inclusion of a nearly $38 million allowed-claim provision provides additional context to the government’s decision to settle for $825,000 based on the defendants’ financial condition.
Default Could Carry Significant Consequences
The agreement also establishes substantial consequences if Crown Medical and the Kings fail to make the required payments.
If a payment is missed, the government must provide written notice and give the defendants seven days to cure the default.
If the default remains uncured, the unpaid settlement balance can become immediately due.
Interest on that balance can then increase to 12% annually, compounded daily, according to the agreement.
The government could also pursue collection, offset money otherwise owed to the defendants by federal agencies, enforce the agreement in court, or potentially rescind the settlement and pursue the underlying civil claims.
The Department of Health and Human Services Office of Inspector General also retains the ability under specified default circumstances to exclude the defendants from participation in federal healthcare programs until the settlement obligation is satisfied.
Settlement Does Not Release Every Potential Claim
The agreement resolves defined civil claims related to the conduct covered by the settlement, but it does not provide a blanket release from every possible government action.
Among other things, the United States specifically reserves rights involving tax liability, criminal liability, certain administrative enforcement actions, conduct outside the settlement’s defined scope, and claims involving people other than Michelle and Philanzo King.
The agreement’s reservation of criminal liability does not mean criminal charges are pending or that prosecutors intend to bring criminal charges.
It means only that the civil settlement does not legally release potential criminal liability.
No criminal charges against Crown Medical or the Kings were announced in Monday’s Justice Department release.
The defendants also agreed not to seek payment from Medicare beneficiaries, their families or third-party payers for healthcare billings covered by the settlement.
Medicare Equipment Billing Remains Enforcement Focus
Durable medical equipment has long been an area of federal healthcare-fraud enforcement because Medicare pays for enormous numbers of braces, wheelchairs, medical supplies and other products prescribed for beneficiaries.
The Crown Medical case centers on one of the system’s basic safeguards: Medicare generally pays for covered durable medical equipment only when applicable requirements for medical necessity and proper orders or prescriptions are met.
The government alleges Crown Medical did not follow those safeguards in the claims covered by the settlement.
The Justice Department said the case resulted from coordination between its Civil Division’s Commercial Litigation Branch Fraud Section and the U.S. Attorney’s Office for the Northern District of Georgia.
Trial Attorney Anna Jugo of the Commercial Litigation Branch and Assistant U.S. Attorney Neeli Ben-David handled the matter.
DOJ also placed the settlement within a broader federal campaign against fraud, waste, and abuse involving government programs.
The administration launched a Task Force to Eliminate Fraud and a National Fraud Enforcement Division in 2026, and federal officials say False Claims Act enforcement remains one of the government’s principal tools for recovering taxpayer money allegedly obtained through improper claims.
Case Expected to Be Dismissed After Initial Payment
The settlement provides a path toward ending the long-running federal civil case.
Once the government receives the initial $25,000 payment, the United States and Martinelli are to file a joint stipulation dismissing the defendants from the civil action.
The dismissal will be with prejudice as to the government and whistleblower for the conduct specifically covered by the settlement, subject to the settlement’s conditions and enforcement provisions.
The arrangement brings to a close a case that began with Martinelli’s whistleblower complaint in April 2019 — more than seven years before the Justice Department publicly announced the settlement.
Crown Medical itself has not operated since April 2019, according to the settlement.
The federal government’s recovery, however, will continue for more than two additional years if the defendants make payments according to the agreed schedule.
The case illustrates both the reach of the False Claims Act and the role private whistleblowers can play in federal healthcare enforcement.
It also demonstrates why the headline settlement figure does not always tell the entire story.
The public agreement shows a negotiated $825,000 resolution based specifically on ability to pay, a payment schedule extending through 2028, personal liability for both owners, collateral securing the government’s recovery, and a nearly $38 million allowed-claim provision that could become relevant under specified bankruptcy circumstances.
At the same time, the case’s legal status must remain clear: Crown Medical and the Kings agreed to resolve the government’s civil allegations, but the settlement is not an admission of wrongdoing, and no court has determined that the defendants violated the False Claims Act.
