Yesterday, we discussed how the DOJ was beginning to focus on fraud surrounding the COVID-19 pandemic. Today, this article reviews another, somewhat related, “hot” topic for the DOJ – telemedicine. Over the past year, we have seen telemedicine become more popular than ever. As one might expect, as a result of that, the Department of Justice (DOJ) seems to have set its enforcement sights on telehealth to ensure compliance with federal laws.
In April 2021, the DOJ charged the owners of four orthotic brace suppliers and several marketing companies with allegedly orchestrating a nationwide kickback and bribery scheme to order medically unnecessary orthotic braces for Medicare beneficiaries.
The five defendants charged include: Thomas Farese and Pat Truglia, owners of orthotic brace suppliers, who were charged with one count of conspiracy to commit health care fraud and three counts of health care fraud; Christopher Cirri and Nicholas DeFonte, owners and operators of a fraudulent marketing company, who were charged with one count of conspiracy to commit health care fraud; and Domenic Gatto, an owner and operator of an orthotic brace supplier, charged with one count of conspiracy to commit health care fraud.
Essentially, the government alleges that from October 2017 to April 2019, the defendants participated in a nationwide conspiracy to defraud Medicare, Tricare, Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA), and other federal and private health care benefit programs. The defendants allegedly paid and received illegal kickbacks in exchange for orthotic brace orders that were not medically necessary, to the tune of $65 million in total loss.
The DOJ further alleged that Truglia, Cirri, and DeFonte operated or controlled marketing call centers to solicit patients and entice them to accept orthotic braces, irrespective of whether they needed them. Those three defendants paid telemedicine companies illegal kickbacks and bribes in exchange for doctors and other providers signing brace orders and falsely swearing to their medical necessity. The three defendants also hid the kickbacks and bribes by entering into sham contracts with the fraudulent telemedicine companies and issuing invoices for “marketing” or “business process outsourcing” expenses.
Farese and Truglia purchased these brace orders through orthotic brace suppliers in Georgia and Florida through which they billed the federal and private health care benefit programs for the orders. Further, in an attempt to conceal their ownership interests in the brace suppliers, Farese and Truglia used nominee owners and provided those names to Medicare.
The complaint goes on to allege that Gatto connected Cirri and DeFonte to other co-conspirators and arranged for the two of them to sell orthotic brace orders to orthotic brace suppliers in New Jersey and Florida, in exchange for illegal health care kickbacks and bribes. Gatto (and others) then paid kickbacks to Cirri and DeFonte for each federal health care beneficiary for whom orthotic brace orders were sold to orthotic brace suppliers. As mentioned above, to conceal the kickbacks and bribes, Cirri and DeFonte created sham invoices labeling the payments as “marketing” and “business processing outsourcing” expenses. Similar to Farese and Truglia, Gatto concealed his ownership interest in the brace supplier by using a nominee owner on forms submitted to Medicare and used shell corporations to transfer the funds he paid in connection with the purchase of the supplier.
The charges the defendants face are punishable by up to 10 years in prison and a $250,000 fine, or twice the gross profit or loss caused by the offense (whichever is greater).