The U.S. Department of Justice filed charges against 24 telemedicine and medical equipment company executives and physicians for their alleged participation in a $1.2 billion healthcare fraud scheme.
The defendants in the case include CEOs and chief operating officers of telemedicine companies, owners of durable medical equipment companies and licensed medical professionals. As part of the investigation, DOJ also executed more than 80 search warrants in 17 federal districts.
The Center for Medicare Services, Center for Program Integrity (CMS/CPI) is also taking action against 130 medical equipment companies implicated. Those companies billed the program $1.7 billion in claims, of which more than $900 million was paid out, according to the DOJ.
The enforcement actions were led and coordinated by the Health Care Fraud Unit of the Criminal Division’s Fraud Section in conjunction with its Medicare Fraud Strike Force (MFSF), as well as the U.S. Attorney’s Offices for the Districts of South Carolina, New Jersey and the Middle District of Florida. The MFSF is a partnership among the Criminal Division, U.S. Attorney’s Offices, the FBI and the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG)
In its complaint, the DOJ alleges the defendants were involved in a "complex, multi-layered" scheme of illegal kickbacks and bribes by medical equipment companies in exchange for the referral of Medicare beneficiaries by physicians working with fraudulent telemedicine companies for back, shoulder, wrist and knee braces that are medically unnecessary.
FBI Assistant Director Robert Johnson said it was one of the largest healthcare fraud schemes in U.S. history and the indictments were the result of close collaboration and coordination between the FBI and partners including HHS-OIG and IRS Criminal Investigation.
Officials also described an “international telemarketing network” that lured more than hundreds of thousands of elderly and disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and throughout Latin America.
“The breadth of this nationwide conspiracy should be frightening to all who rely on some form of healthcare,” Chief Don Fort of the IRS Criminal Investigation unit said in a statement. “The conspiracy described in this indictment was not perpetrated by one individual. Rather, it details broad corruption, massive amounts of greed, and systemic flaws in our healthcare system that were exploited by the defendants.
Telemarketers would reach out to seniors offering “free or low-cost” medical equipment braces, regardless of medical necessity, according to the complaint. The call centers paid kickbacks and bribes to telemedicine companies to obtain medical equipment orders. The telemedicine companies then allegedly paid physicians to prescribe medical equipment either without any patient interaction or with only a brief telephone conversation with patients they had never met or seen. The call centers then sold the orders from the telemedicine companies to medical equipment companies, which fraudulently billed Medicare, according to the DOJ complaint.
“The proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate in the United States and abroad,” DOJ officials said.
A DOJ press release names five companies—Video Doctor USA, AffordADoc, Web Doctors Plus, Integrated Support Plus and First Care MD—as being involved in alleged telemedicine and durable medical equipment marketing schemes.
“These defendants, who range from corporate executives to medical professionals, allegedly participated in an expansive and sophisticated fraud to exploit telemedicine technology meant for patients otherwise unable to access healthcare,” Assistant Attorney General Brian Benczkowski said in a statement.
Collectively, the CEOs, COOs, executives, business owners and medical professionals involved in the conspiracy are accused of causing over $1 billion in losses, DOJ said.
“White collar crime is not victimless,” U.S. Attorney Sherri Lydon of the District of South Carolina said in a statement. “All taxpayers will endure the rising cost of healthcare premiums and out-of-pocket costs as a result of fraud on our Medicare system.”
“Healthcare fraud causes billions of dollars in losses, it deprives real patients of the critical healthcare services they need, and it can endanger the lives of real patients so individuals like those arrested today can profit from their criminal activity,” Johnson said.