DOJ sets charges in $1.2B Medicare fraud scheme using telemedicine

The Department of Justice has charged 24 defendants, including executives with five telehealth vendors, in one of the largest healthcare fraud schemes investigated by the FBI and HHS Office of the Inspector General.

According to DOJ, the nationwide case involves more than $1.2 billion in losses as a result of the “alleged” payment of illegal kickbacks and bribes by durable medical equipment (DME) companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine vendors for medically unnecessary back, shoulder, wrist and knee braces.

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



Last year, telemedicine vendor HealthRight—with locations in Pennsylvania and Florida—and the company’s CEO pleaded guilty in a $1 billion healthcare fraud scheme. Four other individuals and seven companies were indicted in the scheme—all charged with conspiracy to commit healthcare fraud, mail fraud and introducing misbranded drugs into interstate commerce.

Also See: Telehealth vendor pleads guilty in $1B fraud scheme

In this latest case, some of the 24 defendants lured patients into the fraud scheme through an international call center that targeted Medicare beneficiaries and “up-sold” them to accept numerous “free or low-cost” back, shoulder, wrist and knee braces.

“The international call center allegedly paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these Medicare beneficiaries,” according to allegations in court documents cited by the DOJ announcement. “The telemedicine companies then allegedly paid physicians to write medically unnecessary DME orders. Finally, the international call center sold the DME orders that it obtained from the telemedicine companies to DME companies, which fraudulently billed Medicare.”

“The defendants took advantage of unwitting patients who were simply trying to get relief from their health concerns,” said U.S. Attorney Craig Carpenito. “Instead, the defendants preyed upon their weakened state and pushed millions of dollars’ worth of unnecessary medical devices, which Medicare paid for, and then set up an elaborate system for laundering their ill-gotten proceeds.”