TAMPA, Fla.--Mobility Products Unlimited will pay $2.78 million to resolve civil fraud allegations, federal prosecutors announced May 25.

The settlement ends a government investigation into whether the South Daytona, Fla.-based provider improperly billed Medicare for used wheelchairs and scooters as if they were new, according to the office of U.S. Attorney Paul Perez with the Middle District of Florida.

The government also alleged that MPU billed separately for unbundled wheelchair and scooter accessories (mainly seatbelts and adjustable-height armrests) and offered Medicare beneficiaries manual wheelchairs for free or at a drastically reduced price in order to secure the sale of a power chair, the attorney's office said.

In addition to the payment, MPU and its owner, John Ward, entered into a five-year corporate integrity agreement, according to the attorney's office. The deal requires MPU to hire an independent organization to conduct a comprehensive claims review, including determination of medical necessity.

MPU--the country's second largest power wheelchair and scooter provider, according to officials--advertises heavily on TV. In a statement, the company acknowledged no wrongdoing and noted that Ward became CEO in July 2005. The investigation covered a period from January 1999 through May 2005.

"We are pleased to have resolved these complex matters by working closely with the government. Mobility Products Unlimited fully cooperated with the government during the course of their one-and-a-half year inquiry, and I believe that it is in the best interest of the company to put these prior period matters behind us," Ward said in the statement.

The settlement agreement was reached with the U.S. Attorney's Office for the Middle District of Florida, the Department of Justice, Civil Division, and the HHS Office of Inspector General.