DOJ: 24 charged in $1.2B healthcare fraud scheme

Twenty-four defendants, including C-suite executives from five telemedicine companies, the owners of dozens of durable medical equipment (DME) companies and three licensed medical professionals, have been charged in what the U.S. Department of Justice is calling one of the largest healthcare fraud schemes investigated by the FBI and HHS.

According to the DOJ, the fraud scheme resulted in more than $1.2 billion in losses, as well as the execution of more than 80 search warrants in 17 federal districts. CMS’ Center for Program Integrity also announced it has taken adverse administrative action against 130 DME companies that had submitted more than $1.7 billion in claims, $900 million of which had already been paid.

“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 A. Benczkowski said in a statement. “This Department of Justice will not tolerate medical professionals and executives who look to line their pockets by cheating our healthcare programs.”

The alleged scheme involved fraudulent DME companies bribing and paying illegal kickbacks to medical professionals, who would in turn prescribe their Medicare patients medically unnecessary equipment distributed by those companies. Physicians reportedly prescribed their patients unnecessary back, shoulder, wrist and knee braces without meeting or seeing them, using telemedicine as a facilitator.

Some defendants have been accused of controlling an international telemarketing network that lured hundreds of thousands of elderly or disabled patients into a related scheme that spanned from the Philippines to Latin America. Proceeds were used to purchase cars, yachts and luxury real estate in the U.S. and abroad.

“The indictments we are unsealing today charge the defendants with running a complex, multilayered scheme to defraud our Medicare system and avoid detection by government regulators,” U.S. Attorney Craig Carpenito said in a statement. “The defendants took advantage of unwitting patients who were simply trying to get relief from their health concerns. Instead, the defendants preyed upon their weakened state and pushed million of dollars’ worth of unnecessary medical devices, which Medicare paid for, and then set up an elaborate system for laundering their ill-gotten proceeds.”

Find more about the case here.