Three dozen defendants across the U.S. were charged this week for more than $1.2 billion in alleged fraud involving telehealth, phony genetic testing and durable medical equipment.
WHY IT MATTERS
The U.S. Department of Justice announced the coordinated law enforcement action, which includes criminal charges against executives from virtual care vendors, owners of clinical laboratories and makers of durable medical equipment, among others.
Meanwhile, the Centers for Medicare and Medicaid Services’ Center for Program Integrity also announced that it has taken administrative actions against more than 50 healthcare providers alleged to be involved in similar schemes.
The coordinated investigations primarily targeted the alleged payment of kickbacks and bribes by lab operators in exchange for the referral of patients by medical professionals working with allegedly fraudulent telemedicine and digital health companies.
Some of the defendants are said by the DOJ to operate a telemarketing network that lured elderly and disabled patients into a criminal scheme; marketers allegedly had telemarketers use deceptive techniques to induce Medicare beneficiaries to agree to cardiovascular genetic testing, and other genetic testing and equipment.
The charges allege that these companies arranged for medical professionals to order expensive genetic tests and medical equipment regardless of whether the patients needed them, and that they were ordered without any patient interaction or with just a brief phone call.
One case charged involved the operator of several clinical laboratories, who was charged in connection with a scheme to pay over $16 million in kickbacks to marketers who, the DOJ alleges, paid kickbacks to telehealth companies and call centers in exchange for doctors’ orders.
“The Department of Justice is committed to prosecuting people who abuse our healthcare system and exploit telemedicine technologies in fraud and bribery schemes,” said Assistant Attorney General Kenneth A. Polite, Jr. in a statement.
“This enforcement action demonstrates that the department will do everything in its power to protect the healthcare systems our communities rely on from people looking to defraud them for their own personal gain.”
The DOJ notes that the charges include some of its first prosecutions related to fraudulent cardiovascular genetic testing, which it calls “a burgeoning scheme.”
Medical professionals are alleged to have made referrals for expensive and medically unnecessary cardiovascular and cancer tests, even though genetic testing wasn’t a method of diagnosing whether an individual presently had a cardiac condition and was not approved by Medicare.
Defendants are alleged to have submitted more than $174 million in false and fraudulent claims to CMS, allegedly laundering the proceeds “through a complex network of bank accounts and entities, including to purchase luxury vehicles, a yacht, and real estate,” according to the DOJ. “The indictment seeks forfeiture of over $7 million in United States currency, three properties, the yacht, and a Tesla and other vehicles.”
The DOJ notes that a “complaint, information or indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.”
THE LARGER TREND
Starting in 2007, the DOJ’s healthcare Fraud Strike Force – operating in 27 districts nationwide – has charged more than 5,000 defendants who collectively billed federal healthcare programs and private insurers approximately $24.7 billion, according to the department.
The new charges follow other prior telemedicine enforcement actions involving over $8 billion in fraud, including 2019’s Operation Brace Yourself, 2019’s Operation Double Helix, 2020’s Operation Rubber Stamp, and the telemedicine component of the 2021 National healthcare Fraud Enforcement Action.
Among just some of the DOJ’s recent enforcement actions: a lab owner pleading guilty for his role in a $73 million Medicare kickback scheme and another case involving $1.1 billion in alleged fraud.
ON THE RECORD
“Fraudsters and scammers take advantage of telemedicine and use it as a platform to orchestrate their criminal schemes,” said Assistant Director Luis Quesada of 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. healthcare system at the expense of patients.”
“The Centers for Medicare & Medicaid Services continues to aggressively investigate fraud, waste and abuse and has taken action to protect patients, critical healthcare resources and to prevent losses to the Medicare Trust Fund,” added CMS Administrator Chiquita Brooks-LaSure. “Work like this to combat fraud, waste, and abuse in our federal programs would not be possible without the successful partnership of CMS, the Department of Justice, and the U.S. Department of Health and Human Services Office of Inspector General.”