Over the past few years it has been hard to avoid the radio and television ads encouraging Medicare recipients with back or knee pain to contact a call center so that they could be provided with a “free or low-cost” back or knee brace to ease their joint pain. Many elderly or disabled Medicare beneficiaries – hundreds of thousands of them, in fact – did call in. Following that, the patients had a brief telephone conversation with a doctor they had previously never met and then received their brace in the mail. Some patients never even had the telephone call with the doctor before receiving their brace. Unfortunately, these patients had become ensnared in what the Department of Justice (“DOJ”) refers to as the “one of the largest health care fraud schemes in U.S. history.” The scheme was investigated by the Federal Bureau of Investigation (“FBI”), the Department of Health and Human Services Office of the Inspector General (“HHS-OIG”), and the Internal Revenue Service (“IRS”).
On April 9, 2019, the DOJ announced charges against 24 defendants, including C-suite level executives of five telemedicine companies, owners of dozens of Durable Medical Equipment (“DME”) companies, and three licensed medical professionals, for their alleged participation in the health care fraud scheme that resulted in a loss exceeding $1.2 billion. On the same day, the Center for Medicare Services, Center for Program Integrity (“CMS/CPI”) announced that it took “adverse administrative action” against 130 DME companies that submitted over $1.7 million in claims in conjunction with the Medicare brace scheme, and had received over $900 million in payment on those claims.
The alleged scheme involved numerous parties and operated in multiple countries. According to the DOJ, an international telemarketing center “lured” Medicare patients through television and radio ads to contact call centers in the Philippines and Latin America. The call centers would collect the patients’ contact and beneficiary information. The call centers then paid kickbacks and bribes to telemedicine companies to obtain DME orders. The telemedicine companies allegedly obtained the orders by paying physicians to write “medically unnecessary” DME prescriptions. Finally, the call centers sold the DME orders to DME companies, who billed Medicare for the fraudulent DME orders. The DOJ further alleged that the defendants laundered the proceeds of the fraudulent scheme through international shell corporations, and used the funds to purchase “exotic automobiles, yachts and luxury real estate in the US and abroad.”
The DOJ brought charges against the defendants relating to the payment of illegal kickbacks and bribes, money laundering, conspiracy to commit health care fraud, and health care fraud. The IRS called the breadth of the conspiracy “frightening,” and said that it reflected “broad corruption, massive amounts of greed, and systemic flaws in our healthcare system.”