Contemporary shower fixtures are only one of the items that rankle the president, who complains that “there’s no water coming and you end up standing there five times longer,” making it difficult to coif his “perfect” hair. He has frequently denounced dishwashers that he claims take so long and clean so poorly that “the electric bill is ten times more than the water”; toilets that require flushing “ten or 15 times”; and LED lightbulbs, which he faults for making him look orange.

In his first term, Trump pursued an array of gimmicks to try to undermine the rules. His moves were opposed by industry and environmental groups alike. If it’s possible for regulations to be popular, these ones are. They have cut America’s water and energy consumption, reduced global-warming emissions and saved consumers money. Legal prohibitions stymied most of Trump’s maneuvers back then, and the Biden administration quickly reversed the steps Trump managed to take.

Trump’s executive order on showerheads generated headlines, but it’s likely to have little effect (more on that later). Far more consequential steps have been taken outside the Oval Office.

With the aid of Elon Musk’s Department of Government Efficiency team, Trump appears to be attempting an end run that could succeed where his past attempts failed: by simply terminating the consulting contract that the Department of Energy relies on to develop and enforce the rules. In late March, DOGE’s “wall of receipts” stated that it had “deleted” a Department of Energy contract for Guidehouse LLP (a PricewaterhouseCoopers spinoff) for “Appliance Standards Analysis and Regulatory Support Service,” producing a listed savings of $247,603,000. That item has now disappeared from the DOGE website, and its current status remains unclear.

This has produced confusion for everyone from appliance manufacturers to government officials to the contractors paid to enforce the rules. If the contract is indeed canceled, experts told ProPublica, it would cripple the government’s efficiency standards program, which relies on the consulting firm’s technical expertise and testing labs to update standards, ensure compliance and punish violators.

“It would have a huge impact,” said George Washington University law professor Emily Hammond, who helped run the program as deputy general counsel at the Department of Energy and now serves on its appliance standards advisory committee. “DOE does not have the internal capacity to do that work. Taking that away pulls the rug out from under the agency’s ability to run that regulatory program.”

Appliance manufacturers seem almost as concerned. “This is not a positive development,” said Josh Greene, vice president for government affairs at A.O. Smith, the largest manufacturer of water heaters in the U.S. Terminating the Guidehouse contract, he said, would create “a wild Wild West” where “upstart manufacturers” are free to import poor-quality products because “they know there’s no one to enforce the rules. That’s not good for American manufacturing and it’s not good for consumers.”

The Department of Energy has made no public attempts to clarify the matter. An agency spokesperson did not respond to ProPublica’s requests for comment. Emails to DOGE and the White House brought no reply. And Guidehouse officials, reportedly eager to lay low, also offered no response to multiple requests for comment.

The government’s efficiency requirements originated with the Energy Policy and Conservation Act, signed into law in 1975, when the concern was an energy shortage, not global warming. Today, the Department of Energy is required to set rules for energy and water use by more than 70 appliances and commercial products sold in the U.S. The agency must consider imposing stricter standards for each product every eight years, based on what is “technologically feasible and economically justified.” Manufacturers then have three to five years to make their products measure up.

The Energy Department typically stiffens a requirement only after years of study, comment, negotiation and testing (and sometimes litigation) among industry, consumer and environmental groups. The law also includes an “anti-backsliding” provision that bars relaxation of standards that have been finalized. Guidehouse and its subcontractors have for years performed virtually all the necessary technical work; they also maintain a certification database that U.S. authorities use to keep illegal products from being imported.

Republican lawmakers, anti-regulation advocates and right-wing media have long decried the efficiency rules as an impingement on personal freedom, limiting product choice. The early rollout of water-throttling products produced some of the issues Trump complains about, lampooned in a 1996 “Seinfeld” episode titled “The Shower Head.”

But in the decades since, the standards have been widely embraced, dramatically cutting energy and water consumption, reducing emissions and providing plenty of attractive consumer choices. In 2023, Consumer Reports found that “even the simplest and least expensive showerheads can provide a satisfying shower.” Dishwashers and clothes washers clean better while using less than half as much water and energy as they once did. The transition to LED light bulbs, nearly complete, is estimated to have cut energy bills by $3 billion a year and eliminated the need for about 30 large power plants.

In January, days before Trump returned to office, a Department of Energy report estimated that the efficiency standards are now saving the average American household about $576 a year on their utility bills, while cutting the nation’s energy consumption by 6.5% and water consumption by 12%. A 2022 survey by the Consumer Federation of America found that 76% of Americans support the government setting efficiency standards for appliances.

None of that has slowed Trump’s attacks. During his first term, the Department of Energy ignored legal deadlines for considering efficiency updates on 28 products, blocked the long-planned rollout of new lightbulb rules and sought to bypass finalized appliance standards through byzantine legal maneuvers. Among other things, the Energy Department announced special new “product classes” for dishwashers, clothes washers and dryers that completed their “normal” cycle in an hour or less. This would exempt any such “short-cycle” devices that were introduced from the existing limits on water and energy use.

Manufacturers never brought those models to market. Most existing appliances already had a “short cycle” option that did their job well; those short on time simply had to push that button. And by mid-2022, Biden’s Energy Department had reversed Trump’s regulatory moves. The department went on to issue an array of tightened home appliance rules jointly recommended by industry and consumer groups; most were finalized early enough to be immune from congressional rollback.

This didn’t stop Trump from boasting on the 2024 campaign trail that he had changed everything during his first term. He vowed to fix it all again when he returned to the White House. “Eliminate energy efficiency standards for appliances” was on Project 2025’s list of “needed reforms.”

Sure enough, on his first day back in the White House, Trump issued two executive orders targeting the efficiency rules. On Feb. 11, he posted on Truth Social: “I am hereby instructing Secretary Lee Zeldin to immediately go back to my Environmental Orders, which were terminated by Crooked Joe Biden, on Water Standard and Flow pertaining to SINKS, SHOWERS, TOLIETS, WASHING MACHINES, DISHWASHERS, etc., and to likewise go back to the common sense standards on LIGHTBULBS, that were put in place by the Trump Administration, but terminated by Crooked Joe. I look forward to signing these orders.” (In fact, the rules Trump cited were issued and enforced by the Department of Energy, not the Environmental Protection Agency, where Administrator Zeldin presides.)

None of the standards Trump listed were subject to an executive order, or any other kind of rapid rollback. In simple terms, Trump did not have the legal authority to change these rules.

No matter. Energy Secretary Chris Wright — who had listed “affordability and consumer choice in home appliances” among his top nine priorities — took up the cause. Three days after Trump’s Truth Social post, Wright announced that the Department of Energy was postponing “seven of the Biden-Harris administration’s restrictive mandates on home appliances,” which “have driven up costs, reduced choice and diminished the quality of Americans’ home appliances.” Wright’s list of seven affected “home appliances” actually included three types of commercial equipment and three other regulations long past the point where they could be undone.

That left only one household-product regulation that could be challenged. It involved an item that seemed like an improbable symbol of “freedom” and “consumer choice”: the tankless, gas-fueled hot water heater.

The vast majority of U.S. homes have traditional water heaters with 40- to 50-gallon tanks. By contrast, tankless gas products represent 10% of sales. They are about the size of a carry-on suitcase and heat a stream of water on demand. They’re energy-efficient and roughly twice as expensive as standard heaters.

But the rules governing tankless gas water heaters were vulnerable because they were issued in the final weeks of Biden’s term. That meant lawmakers could reverse them under the Congressional Review Act, which allows lawmakers to block a recently enacted agency rule, if a resolution to do so passes both houses and is signed by the president.

Appearing at the Conservative Political Action Conference on Feb. 20, Wright drew cheers as he offered a Trumpian litany — “My dishwasher has to run for two hours now, and at the end I got to clean the dishes” — before turning to hot water heaters. “We have a factory in the southeastern part of the United States that employs hundreds of people to build a particularly popular product these days,” Wright said. “It is a tankless water heater powered by natural gas,” which he described as “selling like hotcakes.” So, what did the Biden administration do, he asked. “They passed a regulation that would make that product illegal, and that company would be dead.” But under Trump, declared Wright, waving his arms, “we are fixing that problem. That factory is staying open. … America is back, baby!”

Wright returned to “the hot-water thing” in a FoxBusiness interview a month later. Assailing “nanny-state, crazy, top-down mandates that makes it more expensive for American consumers and businesses to buy what they want,” he said the new rule was going to shut down a factory “just built in the southeast United States.” Wright acknowledged that U.S. law bars elimination of other efficiency updates that he and Trump have targeted because they’ve already been finalized. “We can’t officially get rid of them,” he commented. “So we just pushed back the enforcement date, hopefully, to never.”

Wright’s portrayal omitted significant details. The administration’s actions involve a single beneficiary: Rinnai, a Japanese appliance company with $3.3 billion in revenues last year. In 2022, Rinnai opened a $70 million factory south of Atlanta, where about 250 U.S. workers build “non-condensing” tankless gas water heaters, a major moneymaker for the company.

“Non-condensing” tankless heaters are less efficient and less expensive than “condensing” tankless heaters, which reuse heat from their exhaust gases. As a result, Rinnai wouldn’t be able to continue selling them when the new standards went into effect in December 2029.

That, however, wasn’t going to put the company out of business; it wasn’t likely to shut down its U.S. factory, either, though Rinnai raised that specter in government filings where its U.S. president warned the new standards would make the Georgia plant “largely obsolete … eliminating” all its jobs.

Rinnai sells a broad array of products across the world. It also already sold condensing tankless heaters in the U.S. that met the new standard and were imported from Japan. And Rinnai had plans to make them in Georgia, according to the company’s most recent annual report. (Rinnai agreed to make its U.S. chief, Frank Windsor, available for an interview with ProPublica, then canceled twice at the last minute. The company ultimately declined to respond to questions about its public representations.)

Nonetheless, the company, now backed by the Trump administration, has pursued a multitrack campaign to roll back the new standards. Its efforts appear to be on the point of success. A resolution has passed the House and won Senate approval on Thursday. Rinnai has spent $375,000 on Washington lobbyists since 2023, according to disclosure reports. The company also joined with Republican attorneys general in a court challenge to the energy rule.

Three major Rinnai competitors supported the Biden-era regulations. Wisconsin-based A.O. Smith has actively lobbied against Rinnai’s effort to win a congressional rollback. Greene said blocking the standard will “disadvantage” U.S. companies, which have already invested in more efficient condensing technology, by allowing continued sale of Rinnai’s less expensive competing products. “In this time of ‘America First,’ it just seems to us a shame that where we’re heading is rewarding foreign manufacturers,” Greene said. “There should be a level playing field.”

Meanwhile the administration’s campaign has expanded to multiple fronts. On Wednesday, the Department of Energy announced a review of its procedures for energy standards, which one expert described as a reprise of the first Trump administration’s attempts to create procedural hurdles to updating efficiency standards.

Then there was the executive order on showerheads that same day. It, too, seeks to revive a move by the first Trump administration: to circumvent the limits on waterflow by redefining “showerheads” to include multiple nozzles, each of which could emit as much water as the entire showerhead was previously allowed. The Biden-era Energy Department killed that regulation, and Trump is attempting to bring it back while proclaiming that “notice and comment is unnecessary because I am ordering the repeal.”

That order will have virtually no effect because manufacturers have little interest in making showerheads that exceed the current limits, according to Andrew deLaski, executive director of the Appliance Standards Awareness Project, a nonprofit coalition of groups that support the efficiency rules. “The president is asserting king-like authority,” he added, about Trump’s claim that he does not have to follow administrative procedures.

In the end, DOGE could have more of an impact than a would-be monarch, if it’s able to kill the Guidehouse contract. Then, deLaski said, “it would be next to impossible for DOE to enforce its efficiency standards.”

The GSA, the federal agency responsible for managing the government’s land and property, will now be taking advice from Frank Schuler IV, the 57-year-old co-founder and longtime president of Ornstein-Schuler, an Atlanta-based real estate investment company. Schuler’s firm was for years among the most prolific promoters of tax-shelter deals known as “syndicated conservation easements.”

Schuler and his colleagues exploited a tax deduction that was created to reward landowners who give up development rights for their acreage, usually by donating those rights to a nonprofit land trust. When used as intended, conservation easements can preserve pristine land, sometimes as a park that the public can use, and reward the land donor with a charitable tax deduction.

But middlemen like Schuler’s firm turned the tax provision into a highly profitable business, packaging easements into what were essentially outsized tax deductions for purchase. After snatching up a cheap piece of vacant land, Schuler and others typically hired a private appraiser willing to declare that the property had huge untapped development value — that it was suited to become anything from a gravel mine to a luxury resort — and was worth many times its purchase price. They then sold stakes in the easement donation to rich individuals, who claimed wildly inflated tax deductions based on the appraisal, cutting their taxes by twice as much as they’d invested. ProPublica first began investigating the syndicated easement business, which has cost the government tens of billions in tax revenue, back in 2017.

The IRS, the Justice Department and Congress struggled for years, through public warnings, hundreds of audits, tax court cases and criminal prosecutions, to shut down the scheme. Those efforts were countered by $11 million in lobbying expenditures from the promoters and the creation of a Washington-based trade group, called Partnership for Conservation, which Schuler founded. Syndication advocates pressed Congress to defund the IRS crackdown.

In 2020, the Senate Finance Committee released a bipartisan investigative report on the transactions. (Schuler was one of six people subpoenaed by the committee to provide information.) The report, which detailed Ornstein-Schuler’s practices, described syndicated easements as a “dollar machine” for wealthy taxpayers, saving them two dollars in taxes for every dollar they put in, “with promoters pocketing millions of dollars in fees for organizing the deals.” The practice was finally curbed through legislation passed in late 2022, but it remains on the IRS’ “Dirty Dozen” list of “bogus tax avoidance strategies.”

“This is someone who made his money by ripping off American taxpayers and who shouldn’t come anywhere near a position of authority over tax dollars,” commented Sen. Ron Wyden, the Oregon Democrat who helped oversee the Senate investigation, in a written statement after being told about Schuler’s appointment. “He’ll fit right in with the Trump administration.”

Schuler’s exact role in the government is unclear. A GSA staffer said that he was present on a recent 15-minute video “check-in” conducted by Nate Cavanaugh, a 28-year-old who ProPublica has identified as being part of Elon Musk’s DOGE team. Cavanaugh introduced Schuler, who said little, as “my colleague Frank.”

Schuler’s photo and contact information were also listed last week in the agency’s internal staff directory shortly after his profile disappeared from the Ornstein-Schuler website. But it’s unknown whether he’s a paid government employee or a volunteer associated with Elon Musk’s DOGE effort. Schuler and Matt Ornstein did not respond to calls, messages and emails seeking comment. The GSA and Ehikian did not respond to emails sent to the agency’s press office.

In the past, Schuler has described his tax transactions as legitimate and well intentioned. In a 2017 interview with ProPublica, he said his entry into the business of syndicating easements was the result of a personal epiphany sparked when his toddler son compared the paving of a residential development to pollution. As Schuler described it, “The importance of conserving land for him and future generations really pushed me to this point. … That’s why today I’m so passionate about conservation.”

Ornstein-Schuler dropped out of the syndicated-easement business in 2019, citing “recent developments and the uncertainty related to the conservation and gifting of property.” The firm turned to other real estate and tax realms, including launching a new division to buy and sell Georgia state film tax credits. Schuler also reportedly earned a credit as an executive producer on a film in which Mira Sorvino played an AI home security system. (Ornstein, who’s still CEO of Ornstein-Schuler, also co-founded a private equity firm, whose holdings include a chain of dental offices and a chain of car washes.)

But the legal warfare over Ornstein-Schuler’s tax-avoidance business continues today. According to a recent IRS filing, the firm has filed more than 100 tax court cases involving its transactions, contesting more than $4 billion in disallowed charitable deductions from some 2,000 investors. Many of the cases are still pending. Ornstein-Schuler has made long-running efforts to reach a global settlement with the IRS; another filing includes an August 2022 letter from one of its law firms asserting that such an agreement would clear the way for collection of $1.5 billion in taxes and would personally cost Schuler and his partner approximately $150 million in additional taxes, interest and penalties.

A tax court decision handed down last year resolved the first of Schuler’s cases to actually go to trial, involving multiple conservation easements from 2014 on 4,607 acres in rural Alabama. The promoters claimed that the potential for sand and gravel mining justified a total of $187 million in charitable deductions. Investor promotional materials, evidence showed, projected $200,000 in tax savings for every $100,000 invested. The decision, which resolved 13 linked cases involving the property, backed the IRS, disallowing about $180 million of the $187 million in write-offs and imposing 40% “gross valuation misstatement” penalties on most of the disallowed amounts. The judge found that partnerships promoted by Schuler had claimed deductions as high as $50,000 an acre on land that had been purchased less than a year earlier for $2,200 an acre.

In his opinion, Albert Lauber, a senior judge in U.S. Tax Court, pointedly noted how Ornstein-Schuler’s standard pitch of promising investors $2 in tax savings for every $1 they invested assumed he’d obtain a sky-high property appraisal, generating a profitable investor write-off. “When asked at trial how he could have posited in advance a deduction-to-investment ratio of $4.389 to $1, before any appraisals had been performed, Mr. Schuler said that appraisals were basically irrelevant to the tax write-off they were offering,” the judge wrote. He called the land values Schuler’s firm had claimed “wholly implausible.”

“We were making plenty of money,” Schuler testified during the case. “The investors were doing well. And we felt that it was great that land was being conserved.”

Ornstein-Schuler is also among the defendants in a federal class-action suit in Georgia filed by three investors. The suit claims Ornstein-Schuler collaborated with lawyers, accountants, appraisers and others to collect millions in fees through a “fraudulent scheme” that deployed “a mountain of misrepresentations and omissions” to promote invalid easement deductions based on “egregiously inflated appraisals.” Ornstein-Schuler and other defendants have filed a joint motion to dismiss the case, asserting that the risks of the easement investments were fully disclosed and they misled no one.

Ornstein-Schuler has also gone on the attack. In December 2023, it sued the IRS, claiming that the agency had failed to respond to a Freedom of Information Act request for an array of agency documents. The firm complained of “IRS abuses relating to its targeting of conservation easement transactions,” which it said were part of a “well-publicized campaign.” Among the requested documents: “all records of communications between IRS employees and members of the news media,” including ProPublica reporter Peter Elkind, Wall Street Journal reporter Richard Rubin and Forbes reporter Peter Reilly, regarding conservation easements. Rod Rosenstein, a deputy U.S. attorney general during the first Trump administration, is representing Ornstein-Schuler in the case.

But as the current session of Congress hurtles to a close, advocates for oxygen patients — in a seemingly improbable alliance with the companies that have victimized them — are making a final push for legislation that, among other things, would pay the scandal-scarred industry hundreds of millions of dollars more than it currently receives. The patients, many aged and infirm, have been besieging lawmakers with meetings, calls and emails, pressing them to pass the Supplemental Oxygen Access Reform, or SOAR, Act by the end of the year. The corporate and patient advocates vow that if the legislation fails in the current term, as seems possible, they will push to reintroduce it next year.

The SOAR Act would achieve two long-sought goals for the industry, which receives much of its revenues from Medicare. The bill would protect companies from additional reductions in their billings by removing oxygen from Medicare’s competitive bidding program, which has saved taxpayers hundreds of millions of dollars. And it would make it far more difficult for the government to challenge those billings.

The patient groups, in turn, have their own goals: improving the industry’s notoriously poor service and assuring access to costly liquid oxygen for a relatively small group of the sickest patients. That form of oxygen is coveted by patients with advanced lung disease because it provides the high flows they need in easy-to-carry cylinders that last for hours. Emotional accounts of stricken patients, unable to obtain the equipment they need, have been prominent in the lobbying campaign to pass the measure.

“The current situation is pretty horrific,” said Susan Jacobs, pulmonary research nurse manager at Stanford University Medical Center, who has spent more than a decade studying access to oxygen therapy and supports the legislation. “Patients aren’t getting the oxygen devices they need or being educated or trained on use of that device. The SOAR Act addresses multiple issues.”

Jacobs and other advocates acknowledge the history of bad behavior by oxygen companies. “I used to feel like they are the enemy,” Jacobs said. Added Erika Sward, assistant vice president of national advocacy for the American Lung Association, another supporter of the SOAR Act: “Some of the companies were very much acting in bad faith when it came to taxpayer dollars.”

But the patient advocates are now backing the industry’s long-standing complaints that Medicare’s payment cuts have gone too far. “I have become convinced of this over the past five years or so,” Sward said. “They’re not being paid enough under competitive bidding. … I fully believe the suppliers are negotiating from a very good-faith perspective for patients.” She added: “Unless everyone is willing to compromise, nothing is going to change. Obviously they have a financial interest.” (Sward said the American Lung Association receives no funding from oxygen companies or trade groups.)

The SOAR Act, which now has a half dozen sponsors in the Senate and 31 in the House, was first introduced in late February by Louisiana Republican Sen. Bill Cassidy, a physician, and Democratic senators Mark Warner of Virginia and Amy Klobuchar of Minnesota. “Respiratory care is lifesaving for so many patients, but too often access to this care is cost-prohibitive or simply not accessible,” said Warner, in a joint press release issued at the time. Cassidy, Warner and Klobuchar did not respond to requests for comment.

Beyond protecting against further Medicare rate cuts for items such as an oxygen concentrator (the bill would essentially freeze them at current levels), the SOAR Act would create a standardized medical form for authorizing suppliers’ claims; pay companies like Lincare to provide respiratory therapist services; and more than double what the companies are paid for liquid oxygen systems.

The bill is projected to cost taxpayers about $654 million over 10 years, according to a private study partly funded by industry (which the SOAR Act’s supporters have declined to share). The nonpartisan Congressional Budget Office has not yet prepared an estimate. Beneficiaries would also have to pay the companies more as part of their 20% Medicare copay.

Liquid oxygen has long been virtually unavailable even to Medicare beneficiaries who need it most. In 2004, before cuts in the government’s historically lavish payments for oxygen began kicking in, suppliers provided portable liquid oxygen equipment to more than 80,000 Americans.

Fewer than 4,000 Medicare patients received liquid oxygen in 2021, according to Medicare data. That’s a tiny portion of the 1.5 million Americans who now receive some form of supplemental oxygen. The bill’s advocates say there are thousands of Medicare beneficiaries who desperately need liquid oxygen to live more normal lives. “We’re ordering liquid,” Jacobs said. “Our [suppliers] are saying, ‘We don’t have it, and we can’t provide it.’ That’s not acceptable. Patients should be able to have enough oxygen to get out of their house. They’re unable to go to religious services, unable to see family, can’t go to a child’s graduation. These are heart-wrenching stories.”

Under the competitive bidding program that was launched in 2011, oxygen companies were legally required to provide liquid systems to any patient whose doctor prescribed them. But the companies insisted it was too expensive to do it at the rates the companies had agreed to in the bidding process. Providing liquid oxygen, which is stored at freezing temperatures under high pressure in special equipment, requires special trucks, frequent deliveries and hazmat-certified drivers.

Medicare enforcers never cracked down on the companies. Then, in 2019, the federal government “paused” the oxygen bidding program and many of its reimbursement rules — five years later, it can’t say when it may replace or reactivate them — freeing companies from any obligation to provide liquid oxygen.

In a statement, a Medicare spokesperson repeated the program’s long-standing contention, disputed by industry and patient groups alike, that access to liquid oxygen has not been a significant problem: “Although there were some complaints about contract suppliers refusing to furnish liquid oxygen, the suppliers came into compliance and agreed to furnish the liquid oxygen, so no [supplier] contracts were terminated as a result.”

The SOAR Act also includes what advocates call a “patient bill of rights” — and which they view as a major concession by the oxygen companies. Aimed at addressing the dismal service that has predominated, it and other parts of the bill would require suppliers to provide equipment setup assistance and monitoring, patient education and 24/7 coverage for emergencies as a condition for Medicare payment. (Left unresolved is how the federal government, whose enforcement record has historically been less than stellar, would police such rules.)

Lincare has long blamed problems on Medicare’s cuts and what it characterizes as the “flawed” competitive bidding program. The company told the agency in a 2017 letter that low reimbursements and “burdensome documentation requirements” had made it “next to impossible to continue providing quality services to beneficiaries.” Yet Lincare appears to collect substantial profits. It generated about $300 million in profit in 2023, on revenues of $2.4 billion, according to a former company executive. (Lincare declined to comment.) Rotech, another large company in the home respiratory business, was purchased this year for $1.36 billion, after recording $200 million in earnings for fiscal 2023.

Such profits make it possible for the industry to spend lavishly on Capitol Hill. Its lead trade group is the Council for Quality Respiratory Care, made up of six big manufacturers or distributors of oxygen equipment, including Lincare and Philips, and chaired by Lincare’s CEO. Since 2018, each of the six CQRC companies has reached at least one multimillion-dollar settlement with the government alleging it cheated Medicare. The corporations have typically denied wrongdoing.

Lobbying payments by the trade group and its member companies on reimbursement issues have totaled more than $1.4 million since the start of 2023. CQRC’s outside PR firm won an industry “advocacy” award for its 2016 campaign in support of legislation slowing oxygen reimbursement cuts, where it boasted of generating 29,000 emails to members of Congress. Through such efforts, the award commendation read, “an engaged community of concerned citizens was created to help support CQRC’s efforts.”

In a statement responding to ProPublica’s questions, CQRC praised the SOAR Act for providing “long-overdue Medicare reforms” and correcting service woes that patients and their advocates have often blamed on the industry. The trade group blamed “current law” and “chronic underfunding” for leaving patients “often unable to access the medically necessary home respiratory treatments their doctors prescribe,” but it said the bill would establish “clear patient protections and supplier responsibilities” while protecting Medicare beneficiaries from “potential fraud and abuse.”

Meanwhile, a new government-funded academic study is challenging the industry’s claims about the purported harms of competitive bidding for oxygen services. Published in late October in JAMA Internal Medicine, the investigation examined Medicare data to weigh the bidding program’s impact on patients with chronic obstructive pulmonary disease, by far the largest group of Medicare oxygen patients.

Its conclusion: Competitive bidding saved taxpayers and patients hundreds of millions of dollars, without curbing their access to oxygen or hurting their health. Dr. Kevin Duan, an assistant professor of respiratory medicine at the University of British Columbia and the article’s lead author, told ProPublica his team’s review found no evidence of harm: “No drop in claims, no change in clinical outcomes.” Duan said the study has sparked a backlash from the measure’s advocates. “I knew this was directly questioning a part of the SOAR Act,” he told ProPublica. “I feel like I walked into a firestorm.”

“We don’t have a horse in this race,” Duan said. “There’s a lot of blaming the competitive bidding program without much data. Rarely do we have high-quality evidence that can directly inform a piece of legislation. It shouldn’t be ignored.”

For Lincare, paying multimillion-dollar legal settlements is an integral part of doing business.

The company, the largest distributor of home oxygen equipment in the United States, admitted billing Medicare for ventilators it knew customers weren’t using (2024) and overcharging Medicare and thousands of elderly patients (2023). It settled allegations of violating a law against kickbacks (2018) and charging Medicare for patients who had died (2017). The company resolved lawsuits alleging a “nationwide scheme to pay physicians kickbacks to refer their patients to Lincare” (2006) and that it falsified claims that its customers needed oxygen (2001). (Lincare admitted wrongdoing in only the two most recent settlements.)

Such a litany of Medicare-related misconduct might be expected to provoke drastic action from the Department of Health and Human Services, which oversees the federal health insurance program that covers 1 in 6 Americans. Given that most of Lincare’s estimated $2.4 billion in annual revenues are paid by Medicare, HHS wields tremendous power over the company.

Sure enough, as part of the 2023 settlement, HHS placed Lincare on the agency’s equivalent of probation, a so-called corporate integrity agreement. The foreboding-sounding document includes a “death penalty” provision: Any “material breach” of the probation agreement, which runs for five years, “constitutes an independent basis for Lincare’s exclusion from participation in the Federal health care programs.” Such a ban could effectively kill Lincare’s business.

That sounds dire. Except that before that corporate integrity agreement was signed in 2023, Lincare was under the same form of probation, with the same death penalty provision, from 2018 to 2023, and violated its terms. From 2006 to 2011, Lincare was similarly on probation and also violated the terms, according to the government. And before that — well, you get the picture. Lincare has been on probation four times since 2001. And despite a pattern not only of fraud, but of breaking its probation agreements, Lincare has never been required to do more than pay settlements that amount to pennies relative to its profits.

This is not an aberration. While HHS routinely imposes the death penalty on small operations, it has never barred a national Medicare supplier like Lincare from continuing to do business with the government. Some companies, it seems, are too big to ban.

Lincare’s lengthy record of misbehavior isn’t a surprise to people in the medical equipment business. What is surprising is the federal government’s willingness to pull its punches with a company that has fleeced taxpayers and elderly customers again and again.

Federal officials have never pursued the company executives who oversee this behavior even though two of them, Chief Operating Officer Greg McCarthy and Chief Compliance Officer Jenna Pedersen, have worked at Lincare through all four of the company’s probationary periods. No one has faced criminal charges for activity the government’s own investigators deemed fraud.

Medicare has continued to pay Lincare billions even as many of the company’s customers revile it. Evaluations on customer-review websites are lacerating, and complaints to state attorneys general abound. On the Better Business Bureau’s website, 888 reviewers gave Lincare an average score of 1.3 out of 5. They cite dirty and broken equipment, charges that continue even after equipment has been returned, harassing sales and collection calls, and nightmarish customer service. As one person wrote in April, Lincare is “running a scam where they have guaranteed income” and “the customer can’t do a thing.”

HHS has always been reluctant to cut off big suppliers. Medicare’s first objective is to make sure nothing interrupts the flow of medications, devices and services to beneficiaries. And were HHS to seek to ban Lincare, the company would surely launch a long, costly legal war. But even if the cost of such combat reached many millions of dollars, it would still be a tiny fraction of the amount lost to fraud, which is yet another contributor to the soaring medical costs that bedevil the country. “This is taxpayer money,” said Jerry Martin, a former U.S. attorney who represented an ex-Lincare executive in a whistleblower suit against the company. “We need to pay people that don’t have four corporate-integrity agreements.”

Weak enforcement is not the only problem. Lincare is paid to rent oxygen equipment to patients, with HHS covering most of the monthly bills. But those rental fees often add up to many times what it would cost simply to buy the equipment. “If this were a rational country,” Bruce Vladeck, who ran Medicare from 1993 to 1997, told ProPublica, “the government would buy a million [oxygen] concentrators and pay Amazon or somebody to deliver them.”

In a seven-month investigation, ProPublica examined how Medicare’s largest provider of home medical equipment has managed to take advantage of its customers for a quarter of a century while fending off meaningful enforcement. ProPublica interviewed more than 60 current and former employees and executives, Medicare and Justice Department officials, patient advocates, and health care experts. ProPublica also reviewed dozens of court cases involving Lincare and thousands of pages of internal company documents, sales presentations and emails.

The investigation reveals a dismal picture of a company with a sales culture that depends on squeezing infirm and elderly patients and the government for every penny. Lincare employees are pressured to sell — whether a customer needs a product or not — on pain of losing their jobs.

And the company’s record of misbehavior and conflict extends far beyond its sales and billing practices. Lincare has paid $9.5 million in settlements for data breaches and mishandling patient and employee records. It has faced claims of violating wage rules, harassing customers with sales and collection calls, and tolerating racist comments to an African American employee. (Lincare lost the latter suit at trial and is appealing.) The company has repeatedly sparred in court with former executives, including a 2017 suit in which longtime executive Sharon Ford claimed that the company had cheated her out of a $1 million bonus. (A judge ruled in favor of Ford at trial before the case was overturned on appeal.) Ford testified that Lincare had earned an industry reputation as “The Evil Empire.” And when Lincare’s CEO, Crispin Teufel, resigned last year to become CEO of a rival company, Lincare sued him for breach of contract and misappropriating trade secrets. Teufel ultimately admitted to downloading confidential company records and was blocked from taking the new job. (Teufel did not respond to requests for comment. His replacement, Jeff Barnhard, took over as Lincare’s CEO in July 2023.)

Lincare declined multiple requests to make executives available for interviews. After ProPublica provided a lengthy document listing every assertion in this article, along with separate such letters to executives McCarthy and Pedersen, the company responded with a three-paragraph statement. It asserted that Lincare is “committed to delivering high-quality and clinically appropriate equipment, supplies, and services” but acknowledged “missteps in the past.” The company said its “new leadership” had “commenced a comprehensive review of our policies and procedures to help ensure we are complying fully with all state and federal regulations” and that “investments and enhancements we have made over the last several months will help prevent these issues from repeating in the future.” Lincare did not respond to follow-up questions requesting examples of the steps the company says it’s taking, including whether it has terminated any executives as part of this push.

When ProPublica asked a top Medicare enforcer why Lincare had eluded banishment, her answer suggested she views probation as a continuing ed class rather than a harsh punishment. “It’s like taking a college course,” said Tamara Forys, who is in charge of administrative and civil remedies for HHS’ Office of Inspector General. “At the end of the day, it’s really up to you to change your corporate culture and to study, to learn to pass the class … to embrace that and take those lessons learned and move them forward.” A spokesperson for the Centers for Medicare and Medicaid Services, which runs Medicare, declined to comment on Lincare but said the agency “is committed to preventing fraud and protecting people with Medicare from falling victim to fraud.”

There’s little incentive to refrain from misbehaving in an environment that tolerates bad behavior, said Lewis Morris, who was chief counsel to HHS’ Office of Inspector General from 2002 to 2012. “As long as that [settlement] check is less than the amount you stole, it’s a good business proposition."

Indeed, Lincare has counted on the government’s tepid response, two former company executives told ProPublica. Top management, they said, responds to fraud warnings by conducting a cost-benefit analysis. “I’ve sat in meetings where they said, ‘We might have $5 to $10 million risk — if caught,’” said Owen Kirk Staggs, who ran one of Lincare’s businesses in 2017 and fell out with the company. “‘But we’ve made $50 million. So let’s go for it. The risk is worth the reward.’”

Libby, Montana, provides a glimpse of the way Lincare operates. Oxygen is an urgent need in this mountain town of 2,857. Libby suffers from the lingering effects of “the worst case of industrial poisoning of a whole community in American history,” in the words of the Environmental Protection Agency. An open-pit vermiculite mine, which operated from 1963 to 1990, coated the area — and residents’ lungs — with needle-like asbestos fibers. More than 2,000 Libby citizens have been diagnosed with respiratory diseases since then; some 700 have died.

Hundreds of ailing residents relied on Lincare for home concentrators, which provide nearly pure oxygen extracted from room air. Medicare and Medicare Advantage plans (which the government also funds) covered 80% of the monthly rental of about $135; patients paid the remaining 20%.

In 2020, Brandon Haugen noticed something suspicious in Lincare’s bills. Haugen was a customer service representative at the company’s local distribution site, one of 700 such locations around the country. (Lincare serves 1.8 million respiratory patients in 48 states.)

Lincare was allowed to charge patients and their insurers for a maximum of 36 months under federal rules. After that point, patients could use the equipment without further charge. Lincare, however, kept billing local patients and their Medicare Advantage plans far beyond 36 months — in some cases, for years. To Haugen, this looked like fraud.

Haugen conferred with center manager Ben Montgomery. The two, who had grown up in the area, had been buddies since seventh grade, after getting to know each other at summer Bible camp. Then 38, earnest and just beginning to gray out of their boyishness, the two men were concerned. The patients the men dealt with were their neighbors.

A regional Lincare manager assured them that charging beyond 36 months for Medicare Advantage patients “is the correct way to bill.” Skeptical, Montgomery raised the issue with Lincare’s headquarters in Clearwater, Florida. Lincare’s compliance director told him, according to Montgomery, that “it’s the patients’ problem to fix it if they want it to stop”; that was “just how it worked.” Further questions, sent to Lincare’s chief compliance officer, Pedersen, went nowhere. “It seemed pretty obvious they were well aware of this,” Montgomery told ProPublica. “For me, these were my customers that you were screwing over.”

Among them was Neil Bauer, now 80, who lives in a ramshackle house “out in the boondocks,” as he put it, 38 miles southeast of Libby. Bauer spent his career as a barber, head of investigations for the county sheriff’s department and a member of the local school board. He’s been on oxygen for more than a decade and quickly gets short of breath. “I can’t do stuff so much now,” he said. His wife is on oxygen, too. “We just have a sick family,” Bauer said.

Lincare had kept billing Bauer for his concentrator for seven years after it was supposed to stop. The monthly copays weren’t huge, but they added up to $2,325 that he shouldn’t have been charged over that period, a daunting sum for Bauer, who lives on a fixed income — and a hefty mark-up over the cost of the equipment, which can be purchased online for $799. For its part, Medicare Advantage paid Lincare $9,299 for Bauer’s concentrator during this period, along with another $5,760 for the months Lincare was legally permitted to bill. All told, the rental payments to Lincare, during authorized and unauthorized periods, were $16,547 for that one $799 piece of equipment. “We paid forever,” said Bauer. “Never was I told that we could have one without having to pay anything.”

Haugen and Montgomery studied billing records. Among the customers in their tiny office, Lincare was improperly charging at least 33 people and their Medicare plans. The two began to wonder how far this problem extended. An employee in Idaho confirmed the same practice was occurring there. “In my mind,” Montgomery said, “I went, ‘This is Libby, Montana. Multiply that by every center in the country. This is obviously a lot bigger deal.’”

Montgomery and Haugen had seen enough. On Jan. 18, 2021, they emailed a joint resignation letter to Lincare’s top management, recounting their concerns about billing that “likely affects thousands of patients company wide.” Citing the lack of response from corporate officials, they wrote, “we can only conclude that this is a known issue that is being covered up by Lincare.”

Haugen had 10 children. Montgomery had four. Neither man had another job lined up. “Had this not happened,” said Montgomery, who had been at the company for 13 years, “I would have seen myself retiring from Lincare.”

Instead, they became whistleblowers. They retained a law firm and sued Lincare in Spokane, Washington, the site of Lincare’s regional headquarters. After federal prosecutors decided to back the case, Lincare settled in August 2023. The company admitted to overbilling Medicare plans and patients across the country for years and paid $29 million to settle the matter, with $5.7 million of that going to Montgomery, Haugen and their lawyers. Dan Fruchter, the assistant U.S. attorney leading the government’s case, told ProPublica that the overbillings likely involved “tens of thousands” of patients.

Lincare agreed to its fourth stint of probation with HHS; the new corporate-integrity agreement took effect on the day after the previous one expired. The conduct Montgomery and Haugen flagged had gone on for years while the company was already on probation. But Lincare got the government lawyers to agree that nobody would try to impose the Medicare death penalty. Lincare asserted in the settlement that it had installed software (which it did only after learning of the government investigation) that will prevent billing beyond 36 months. Lincare promised to ensure “full and timely” compliance with the agreement and prevent future wrongdoing.

Medicare fraud, including in the “durable medical equipment” category that Lincare operates in, has long been an intractable problem. It cost the U.S. Treasury an estimated $60 billion in 2023 alone.

The government deploys large sums to try to stop it. HHS’ inspector general’s office has a $432 million budget and a staff of 1,600. Those resources are effectively extended by whistleblowers — most of the cases against Lincare have been such suits — who can receive a percentage of a civil settlement if they reveal wrongdoing, and by federal prosecutors, who can also bring cases or join those filed by whistleblowers. Last year HHS recovered $3.2 billion from fraudulent schemes.

But the agency’s enforcers have wielded their biggest deterrent almost entirely against small perpetrators. In 2023, they banned 2,112 small firms and individuals from Medicare reimbursement.

HHS hasn’t done the same with companies that operate on a national scale. Forys, the agency enforcer, said she worries that expelling a big provider from Medicare could leave customers in the lurch. In April, Inspector General Christi Grimm defended her office’s work in congressional testimony but also asserted that its resources are inadequate. A lack of staff keeps it from even investigating “between 300 and 400 viable criminal and civil health care cases” annually, she testified, as well as more than half the fraud referrals from Medicare’s outside audit contractors.

A different reason for going easy on big companies was suggested by Vladeck, the former Medicare chief. Seeking to bar a large supplier for repeatedly violating probation would require exhaustive documentation and years of litigation against squadrons of well-paid corporate lawyers. As a result, Vladeck said, “there’s a real incentive, from a bureaucratic point of view, to just slap their wrist, give them a kick and make them apologize. … It’s a cost of doing business.”

There are steps enforcers could take, but almost never do, that would make companies take notice, according to Jacob Elberg, a former federal prosecutor who is now a professor at Seton Hall Law School. (Among his publications is a 2021 law review article titled “Health Care Fraud Means Never Having to Say You’re Sorry.”) Elberg’s research shows that HHS and prosecutors tend to negotiate far smaller civil settlements than the law allows, and they rarely prosecute company executives. They also almost never take cases to trial. In short, enforcers have long signaled to companies that they’re looking for a smooth path to a cash payment rather than a stern punishment for a company and its leaders. “It is generally a safe assumption,” Elberg said, “that the result will be a civil settlement at an amount that is tolerable.”

For its part, Congress may soon be weighing a new law that would reshape how the oxygen industry is paid by Medicare. But rather than clamp down on corporations, the legislation seems poised to do the opposite. A new bill called the SOAR (Supplemental Oxygen Access Reform) Act would hand companies like Lincare hundreds of millions more, by raising reimbursement rates and eliminating competitive bidding among equipment providers. Advocates say the legislation will help patients by making some forms of oxygen more available and improving service. But along the way it will reward Lincare and its rivals.

Congress has a history of treating oxygen companies generously. For years, lawmakers set Medicare reimbursements for oxygen equipment at levels that even HHS, in 1997, characterized as “grossly excessive.” Over the succeeding decade and a half, Lincare took advantage, snatching up hundreds of small suppliers and becoming the industry’s largest player.

In 2006, under pressure to reduce costs, Congress approved steps to curb oxygen payments, including the introduction of competitive bidding and the 36-month cap on payments for equipment rentals. But even those strictures were watered down after the industry poured money into political contributions and lobbyists, who warned that cuts would harm elderly patients.

Lincare compensated by amping up strategies that generated profits, with little apparent regard for Medicare’s rules, which say it will reimburse costs for equipment only when there is evidence of “medical necessity.” The company aggressively courted doctors and incentivized sales, through bonuses the company paid for each new device “setup.” According to a 2016 commission schedule, reps could earn $40 for winning an order for a new sleep apnea machine, $100 for a new oxygen patient and $200 for a noninvasive ventilator. The entire staff of each Lincare center could receive a small bonus for signing up a high percentage of new patients for automatic monthly billing. Patients who refused auto-billing, a company document advised, should be warned they might face “collection activity” and service cutoffs. “Sales is our top priority!” declared a 2020 PowerPoint to train new hires.

Once it had a customer, Lincare would pitch them more costly products and services. One way Lincare did this was through a program called CareChecks. Promoted as a “patient monitoring” benefit, CareChecks were aimed, according to a company presentation, at generating “internal growth.” If a patient exhibited a persistent phlegmy cough, Lincare could persuade their doctor to prescribe a special vibrating vest to loosen chest mucus. Nebulizer patients might be candidates for home oxygen. Patients using apnea devices were potential candidates for ventilators. “We’d make patients think we were coming in clinically to assess them,” a former Lincare manager said, “when really it was to make money off of them.”

Selling replacement parts could also be lucrative. At Lincare call centers that sold items like hoses, masks and filters for CPAP machines (used to treat apnea), hundreds of commissioned agents in Nashville, Tennessee, and Tampa, Florida, were equipped with programs displaying what items each patient was eligible for under Medicare. By law, patients had to request replacement parts. But frequently, that wasn’t what happened, according to Staggs, who oversaw the CPAP business in 2017. He discovered that top salespeople, whose bonuses could total $8,000 a month, averaged just a few minutes on the phone per order. That wasn’t nearly enough time to identify what items, if any, customers actually needed. Staggs listened to recorded calls and found that, after reaching customers, agents often placed them on hold until they hung up, then ordered them every product that Medicare would cover.

At Lincare, results were closely tracked and widely shared in weekly emails displaying the best and worst performers in each region. Notes taken by one manager show supervisors’ performance demands during weekly conference calls: “Unacceptable to miss goal … stop the excuses … If this is not being done, wrong [center manager] in place … If you’re not getting O2 and not getting Care Checks — you shit the bed. Stop accepting mediocre, lazy responses ….”

“If we didn’t meet our quota, they were going to chop our heads,” said former Illinois sales rep Sandra Gauch, who worked for Lincare for 17 years before joining a whistleblower suit and quitting in 2022.

One salesperson was so fearful of missing her quota, according to Gauch, that she signed her mother up for a ventilator that she didn’t need. A company audit in 2018 found that only 10 of 56 ventilator patients at one center were using them consistently. Some patients hadn’t used their devices for years. Yet Lincare kept billing Medicare.

Only one thing mattered as much as maximizing new equipment rentals, according to former employees and company documents: minimizing customers’ attempts to end rentals. A call to retrieve breathing equipment meant that it was no longer wanted or being used, and Lincare was supposed to retrieve it and promptly stop billing Medicare and the patient. The person’s health might have improved. They might have gone into the hospital — or died. The reason didn’t matter; at Lincare, “pickups” were a black mark, deducted from employees’ performance scores, jeopardizing their bonuses and jobs.

As a result, employees said, such requests were dreaded, delayed and deterred. Clinical staff were sent to “reeducate” customers to keep using their devices. Patients were told they’d need to sign a form stating they were acting “against medical advice.”

Lincare managers made it clear that pickups should be discouraged. In a 2010 email, an Ohio center manager instructed subordinates: “As we have already discussed, absolutely no pick-ups/inactivation’s are to be do[ne] until I give you the green light. Even if they are deceased.” In 2018, an Illinois supervisor emailed her deputies that pickups were barred without her explicit approval: “Not even Death that I don’t approve first.”

In February 2022, Justin Linafelter, an area manager in Denver, responded to the latest corporate email celebrating monthly “Achievement Rankings” for oxygen sales by pointing out that almost all of the centers atop the rankings had at least 150 “pending pickups,” customers who weren’t using their equipment but whom the company appeared to still be billing. “Some of these centers are just ignoring pickups to make this list.”

That was only one of Linafelter’s concerns. In July of that year, he emailed headquarters, saying he no longer had “the resources to be successful at my job.” The customer service staff in Denver had been cut in half, Linafelter explained, and he’d been barred from hiring replacements. Denver’s remaining staff was “at a point of exhaustion,” threatening patient care.

The morning after Linafelter expressed concerns to Lincare in 2022, he was summoned to a conference call with the head of HR and fired, for what he was told was a “corporate restructuring.” Linafelter, who had worked at Lincare for nine years, said, “I got thrown away like a piece of trash.”

Other former employees offer similar accounts. In 2020, Jillian Watkins, a center manager in Huntington, West Virginia, repeatedly alerted supervisors that Lincare was improperly billing for equipment that patients weren’t using. Lincare blocked her from firing a subordinate who’d falsified documents supporting the charges, then fired Watkins, citing “inadequate direction and leadership.”

Then came a series of turns. Pedersen, the chief compliance officer, effectively confirmed Watkins’ assertions, belatedly alerting the government about $486,000 in improper billings by Lincare. But Pedersen blamed the billings on Watkins, writing to Medicare that the company had “terminated” her to “prevent [the problem] from recurring.” After Watkins sued, Pedersen admitted in a deposition that Watkins’ firing “had nothing to do with the overpayment.” In April 2024, a federal judge ruled that Watkins had presented “a prima facie case of retaliation.” The suit was privately settled in mediation.

Staggs, too, was ousted, he said, after he warned top Lincare executives about improper practices at the CPAP call centers. Staggs emailed a Lincare HR officer: “Patients are being shipped supplies that they never have ordered. … This is fraud and I have gotten zero support or attention to this matter when I raise the issue to my leadership.” Only months after starting, he was fired in November 2017. He later filed a whistleblower suit; Lincare denied wrongdoing. After the U.S. attorney’s office in Nashville declined to join the case in 2022, Staggs withdrew the action.

Staggs’ account of improper billings matches an industry pattern that appears to continue to this day. In a 2018 report, HHS’ inspector general estimated that Medicare had paid more than $631 million in improper claims for CPAP and other supplies over a two-year period. Another HHS analysis identified an additional $566 million in potential overpayments for apnea devices.

The agency’s oversight “was not sufficient to ensure that suppliers complied with Medicare requirements,” the 2018 report concluded. Six years later, HHS has not taken public action against Lincare relating to CPAPs.

Today, fraudulent billing among Medicare equipment providers remains a “major concern,” according to the inspector general. The agency says it continues to review the issue.