DOJ charges 36 over $1.2B in phony telehealth claim fraud schemes

Federal prosecutors charged 36 defendants with committing a variety of alleged schemes to bilk Medicare using telehealth, as regulators continue to tinker with how to make the COVID-19 telehealth boom permanent.

The Department of Justice (DOJ) announced Wednesday that the defendants allegedly engaged in a series of actions that led to $1.2 billion in medical fraud, with much of that coming from phony telehealth claims for advanced genetic testing and unnecessary medical equipment.

“Fraudsters and scammers take advantage of telemedicine and use it as a platform to orchestrate their criminal schemes,” said Luis Quesada, assistant director in the FBI’s Criminal Investigative Division, in a statement. “This collaborative law enforcement action shows our dedication to investigating and bringing to justice those who look to exploit our U.S. health care system at the expense of patients.”

Under one of the alleged schemes, a collection of clinical laboratories would offer $16 million in kickbacks to telemedicine companies, call centers and doctors for genetic testing orders and the documentation needed to submit the claims to Medicare for reimbursement, according to a federal indictment. But the genetic testing was not medically necessary. 

“The defendant allegedly laundered the proceeds of the fraudulent scheme through a complex network of bank accounts and entities, including to purchase luxury vehicles, a yacht and real estate,” the DOJ said in a release.

Another scheme charged by the DOJ focuses on a series of medical supply companies based in Florida that allegedly offered to pay kickbacks and bribes to patient recruiters for Medicare beneficiary referrals, a separate indictment said.

The companies would also offer bribes and kickbacks to telehealth and marketing companies in exchange for ordering medical equipment that wasn’t needed. Doctors who did not have any relationship to the beneficiary or conduct a telehealth visit would write the orders for the equipment, DOJ added in the indictment.

Owners of marketing companies also had telemarketers employ “deceptive techniques” to get Medicare beneficiaries to agree to cardiovascular genetic tests, DOJ said in a release.

This is the latest healthcare fraud operation to target telehealth schemes. Last September, the DOJ charged 42 doctors and nurses and nearly 100 other professionals with $1.4 billion in fraud schemes, including $1.1 billion netted via telehealth services. 

The defendants would allegedly pay doctors and nurse practitioners to order unnecessary equipment and tests. The companies then would purchase the orders in exchange for a series of kickbacks and bribes. 

The DOJ’s latest action comes as the Centers for Medicare & Medicaid Services (CMS) is figuring out how to make permanent a series of regulatory flexibilities that enabled telehealth reimbursement under Medicare. Those flexibilities, such as originating site requirements, are expected to go away with the COVID-19 public health emergency, which could expire later this year. 

Congress has enabled some telehealth flexibilities to go on for five months after the emergency ends, giving CMS more time to identify protections for fraud and waste.