HHS Charges Dozens in $1.2B Telemedicine, DME Fraud Scheme

April 16, 2019 - One of the largest healthcare fraud schemes investigated by the FBI and HHS and prosecuted by the Department of Justice resulted in $1.2 billion in losses and charges against 24 executives of telemedicine and durable medical equipment (DME) companies.

Officials are also taking legal action against 130 DME companies that submitted over $1.7 billion in claims and were paid over $900 million.

The alleged scheme involved the payment of illegal kickbacks and bribes by DME companies in exchange for medical professionals to refer Medicare beneficiaries for medically unnecessary back, shoulder, wrist, and knee braces.

Some defendants allegedly controlled an international telemarketing network, which lured hundreds of thousands of elderly or disabled patients into a criminal scheme that involved call centers in the Philippines and Latin America.

According to the DOJ, the defendants paid doctors to prescribe DME either without any patient interaction or with only a brief conversation over the phone with patients they had never met. Court documents stated that the international call center would then sell the orders to DME companies, which fraudulently billed Medicare.

Proceeds of the scheme were allegedly laundered through international shell corporations and used to buy yachts and luxury real estate in the US and beyond.

“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,” said Assistant Attorney General Benczkowski.  

“This Department of Justice will not tolerate medical professionals and executives who look to line their pockets by cheating our health care programs. I commend the Criminal Division prosecutors and our partners from US Attorney’s Offices and law enforcement agencies across the country for their unrelenting efforts to stop this alleged fraud before more money was stolen from American taxpayers.”

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), a partnership among the Criminal Division, US Attorney’s Offices, the FBI, and HHS.

Since its inception in 2007, MFSF has charged nearly 4000 defendants who collectively billed the Medicare program for more than $14 billion. CMS and HHS are also taking steps to increase accountability and decrease the prevalence of fraudulent providers.

“The CMS Center for Program Integrity (CPI) is proud to work very closely everyday with our law enforcement partners to stop exploitation of vulnerable patients and misuse of taxpayer dollars,” said Deputy Administrator and CPI Director Alec Alexander.  

“In this case, CMS has taken swift administrative action and has suspended payments to 130 distinct providers thereby likely preventing billions of additional dollars in losses. CMS remains committed to protecting the millions of beneficiaries we are honored to serve and to preventing fraud of all sorts in the Medicare and Medicaid programs.”

Strike Force attorneys charged individuals in New Jersey, Florida, Texas, Pennsylvania, and California. In addition, officials executed search warrants to support related investigative efforts.

US Attorney’s Offices across the country are prosecuting and investigating the cases announced, along with MFSF teams from the Criminal Division’s Fraud Section.

“Today, one of the largest healthcare fraud schemes in US history came to an end thanks to close collaboration and coordination between the FBI and partners including HHS-OIG and IRS-CI. 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,” said FBI Assistant Director Robert Johnson.  

“Through today’s coordinated national effort, we put an end to this egregious and costly healthcare fraud scheme, and the public can rest assured the FBI will continue to make healthcare fraud investigations a top priority.”