This summer, the United States Department of Justice (DOJ) announced charges against 78 individuals for their role in nearly $2.5 billion in health care fraud. The charges stemmed from a federal and state law enforcement investigation into multiple areas of health care fraud, including telemedicine and opioid distribution.
Telemedicine Fraud
The DOJ charged 11 defendants in connection with the submission of more than $2 billion in fraudulent claims from telemedicine schemes, including one of the largest health care fraud schemes ever prosecuted. That scheme involved the indictment of a CEO, former CEO, and Vice President of Business Development of an alleged software and services company who conspired to generate and sell templated doctors’ orders for orthotic braces and pain creams, in exchange for kickbacks. The defendants allegedly offered to connect pharmacies with durable medical equipment (DME) suppliers and marketers to telemedicine companies who would accept illegal kickbacks and bribes in exchange for orders transmitted using the company’s platform. The fraudulent orders and prescriptions falsely represented that doctors had treated and examined the Medicare beneficiaries, when in reality, purported telemedicine companies paid doctors to sign the orders and prescriptions without regard for medical necessity and sometimes without any patient contact at all. The conspiracy allegedly resulted in nearly $2 billion in false and fraudulent claims to Medicare and other government insurers for products that were medically unnecessary and ineligible for Medicare reimbursement.
In another case, a licensed physician was charged for signing more than 2,800 fraudulent orders for orthotic braces – including for patients who had already had their limbs amputated. The physician allegedly took less than 40 seconds to review and sign each of the orders.
Opioid Distribution and Other Types of Health Care Fraud
More than 24 licensed professions were involved in the charges for more than $150 million in false billings submitted in connection with various health care fraud, including the illegal distribution of opioids and clinical lab testing fraud.
One such example involved DME front companies, where the owner of a company used that company’s fictitious name to purchase completed and signed doctors’ orders for DME for federal health care companies. The individual would then use the main company to solicit and receive kickbacks and bribes from DME front companies in exchange for the completed and signed doctors’ orders. The individual allegedly received more than $14 million in kickbacks and bribes for the completed and signed doctors’ orders. The DME front companies allegedly used the completed doctors’ orders to submit false and fraudulent claims for payment to federal health care programs, to the tune of more than $37 million.
The Center for Program Integrity of the Centers for Medicare and Medicaid Services (CMS) also announced taking administrative action against 90 medical providers in the prior six months for their alleged involvement in health care fraud. It was not apparent how many of those providers – if any – overlapped with the charges announced by the DOJ.
Pharmaceutical Fraud
Ten of the defendants involved in the charges were connected to more than $370 million in fraudulent claims submitted in connection with prescription drugs. In one of the cases, the owner and corporate officer of a pharmaceutical wholesale distribution company was allegedly involved in a $150 million fraud scheme in which the company purchased prescription HIV medication through illegal “buyback” schemes in where they paid HIV patients cash for their HIV medication. The company then turned around and marketed and resold the medication by falsely representing that the company acquired the drugs through legitimate channels. To cover up the scheme and make the resold medications seem “legitimate,” the defendant (and others) falsified labeling and product tracing documentation.
There was another similar case, in which a defendant illegally acquired prescription drugs from patients for whom the drugs had been prescribed, but who had not yet taken them. The defendant (with others) repackaged the drugs and resold them to wholesale companies. In this case, there were some instances where the resold medications contained broken pills and pebbles.
Case Summaries
A complete list of the involved case summaries can be found here.
Statements
Attorney General Merrick B. Garland said, “these enforcement actions, including against one of the largest health care fraud schemes ever prosecuted by the Justice Department, represent our intensified efforts to combat fraud and prosecute the individuals who profit from it.” He went on to say, “the Justice Department will find and bring to justice criminals who seek to defraud Americans and steal from taxpayer-funded programs.”