A wide-ranging federal investigation involving multiple departments resulted in the indictments of 24 people, including CEOs and COOs of five telemedicine companies, the owners of dozens of durable medical equipment companies and three licensed medical professionals on healthcare fraud charges, the Department of Justice said Tuesday.
The schemes involved more than $1.2 billion in losses that were part of an international program. Medical professionals worked with fraudulent telemedicine companies to push medically unnecessary back, shoulder, wrist and knee braces on hundreds of thousands of Medicare beneficiaries in exchange for kickbacks and bribes from durable medical equipment companies.
The CMS Center for Program Integrity took adverse administrative action against 130 DME companies that submitted more than $1.7 billion in claims and were paid more than $900 million, DOJ said. CMS suspended the payments to prevent further losses.
U.S. Attorney Craig Carpenito said the defendants took advantage of patients and pushed millions of dollars of unnecessary medical devices. Defendants reportedly used the money to purchase luxury vehicles and real estate.
The companies paid doctors to prescribe DME despite not interacting with patients or having minimal conversations by phone. The scheme's proceeds were then laundered through international shell companies to buy cars, yachts and property around the globe. The plot stretched beyond the U.S. border, featuring an international telemarketing network that reached the Philippines and Latin America, DOJ said.
"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 health care," DOJ Assistant Attorney General Brian Benczkowski said in a statement.
The American Association for Homecare, an industry group, sought to separate itself from the indictments.
"The use of outbound telemarketing and misleading advertising to bring in potential patients is not something that should be associated with the overwhelming majority of DME suppliers who furnish essential equipment and services to improve the lives of patients and their caregivers," AAHomecare CEO Tom Ryan said in a statement. "Our industry believes in the long-established model where physicians provide referrals to DME suppliers – not one where lead generation companies connect patients to physicians."
The Medicare Fraud Strike Force, a partnership among the Criminal Division, U.S. Attorney's offices, the FBI and the HHS Office of the Inspector General, took part in the investigation. Since its founding in 2007, the strike force has charged nearly 4,000 defendants who billed Medicare more than $14 billion.
Some other major fraud cases of late include the largest healthcare fraud takedown ever last year. DOJ charged 601 people for falsely billing Medicare, Medicaid and the U.S. military's TRICARE program for more than $2 billion.
The Health Care Fraud and Abuse Control Program created by HHS and DOJ won or negotiated more than $2.4 billion in healthcare fraud judgments and settlements in fiscal year 2017, according to its annual report.
The federal government has increased fraud enforcement in recent years. That includes the DOJ's Health Care Fraud Unit, which focuses on prosecuting criminal healthcare fraud cases. The unit investigates all types of healthcare fraud, including that involving private payers.