DOJ arrests 35 in $2.1B Medicare scam targeting seniors for fraudulent genetic testing

The Department of Justice (DOJ) has taken down what it calls one of the largest healthcare fraud schemes, charging 35 people with unlawfully charging Medicare $2.1 billion.

According to the DOJ, the scheme represents the next big frontier in healthcare fraud: genetic cancer testing.

The DOJ charged nearly three dozen people in five federal districts associated with dozens of telemedicine companies and cancer genetic testing laboratories. According to the charges, these defendants fraudulently billed Medicare more than $2.1 billion for cancer genetic tests. Among those charged are 10 medical professionals, including nine doctors, the DOJ announced in a press release Friday.

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The alleged scheme involves the payment of illegal kickbacks and bribes by cancer genetic testing laboratories in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for expensive cancer genetic tests that were medically unnecessary, federal officials said.

The DOJ Criminal Division, together with the U.S. Department of Health and Human Services Office of Inspector General (OIG) and the FBI, spearheaded the investigation and prosecution that resulted in charges against CEOs, chief financial officers and others.

The DOJ alleges that recruiters or marketers would approach seniors, often at health fairs or during door-to-door visits, about "free" cancer screenings or cheek swabs for genetic testing. Seniors also were targeted through telemarketing calls. The recruiters would obtain these seniors' Medicare information for identity theft or fraudulent billing purposes, according to the DOJ.

The recruiter then gets a doctor to sign off on the genetic test so a lab will process the test and then pays the doctor a kickback in exchange for ordering the test. The lab processes the test and bills Medicare. After the lab is reimbursed for the test by Medicare, the lab shares the proceeds of that payment with the recruiter. 

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The defendants allegedly paid doctors to prescribe the genetic tests either without seeing the patient or with only a brief telephone call with patients they had never met or seen. 

Many of the victims of the scam never received their test results, and their Medicare accounts were billed anyway.

“Unfortunately, audacious schemes such as those alleged in the indictments are pervasive and exploit the promise of new medical technologies such as genetic testing and telemedicine for financial gain, not patient care,” Deputy Inspector General for Investigations Gary Cantrell of OIG said in a statement.

“Instead of receiving quality care, Medicare beneficiaries may be victimized in the form of scare tactics, identity theft, and in some cases, left to pay out of pocket. We will continue working with our law enforcement partners to investigate those who steal from federal healthcare programs and protect the millions of Americans who rely on them," Cantrell said.

The Centers for Medicare & Medicaid Services Center for Program Integrity also announced that it took adverse administrative action against cancer genetic testing companies and medical professionals who submitted more than $1.7 billion in claims to the Medicare program.

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Among the 35 individuals charged in the Southern District of Florida: Richard Garipoli, 42, of Loxahatchee, Florida, the owner of a telemedicine company Lotus Health, who allegedly billed Medicare and Medicare Advantage plans over $326 million; Jamie Simmons, 62, a resident of South Carolina and the owner of telemedicine companies MedSymphony and Meetmydocc who billed Medicare and Medicare Advantage plans over $56 million; and Minal Patel, 40, of Atlanta the owner of LabSolutions in Georgia and Pennsylvania.

Patel allegedly paid telemarketers illegal kickbacks and bribes in exchange for the doctors' orders and medically unnecessary tests and billed Medicare for more than $494 million, the DOJ said. The government seized approximately $30 million in bank accounts from Patel as well as luxury vehicles including a Ferrari and a Range Rover.  

In the Eastern District of Louisiana, Khalid Satary, 47, of Suwanee, Georgia, the owner of several labs in Georgia, Oklahoma and Louisiana, was charged with paying telemarketers illegal kickbacks and bribes. His labs collectively billed Medicare for more than $547 million.  

In addition, 18 other defendants were charged in the Southern District of Georgia including two “telemedicine” physician recruiters, seven physicians and two nurse practitioners. In total, the 19 defendants charged in the Southern District of Georgia were responsible for over $400 million in genetic testing, durable medical equipment and pain cream billing to Medicare, according to court documents.