The Department of Justice (DOJ) has brought criminal charges against 36 defendants in 13 federal districts across the United States for more than $1.2 billion in alleged fraudulent telemedicine, cardiovascular, and cancer genetic testing, and durable medical equipment schemes. Meanwhile, the Office of Inspector General has issued a special fraud alert to warn providers about telemedicine scams.
The DOJ announced Wednesday that the action includes criminal charges against a telemedicine company executive, owners and executives of clinical laboratories, durable medical equipment companies, marketing organizations, and medical professionals.
In addition, the Centers for Medicare & Medicaid Services (CMS), Center for Program Integrity (CPI) also announced that it took adverse administrative actions against 52 providers involved in similar schemes. In connection with the enforcement action, the department seized more than $8 million in cash, luxury vehicles, and other fraud proceeds.
“The Department of Justice is committed to prosecuting people who abuse our health care system and exploit telemedicine technologies in fraud and bribery schemes,” Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division said in the announcement. “This enforcement action demonstrates that the department will do everything in its power to protect the health care systems our communities rely on from people looking to defraud them for their own personal gain.”
The coordinated federal investigations announced primarily targeted alleged schemes involving the payment of illegal kickbacks and bribes by laboratory owners and operators in exchange for the referral of patients by medical professionals working with fraudulent telemedicine and digital medical technology companies. Telemedicine schemes account for more than $1 billion of the total alleged intended losses associated with the enforcement action. These charges include some of the first prosecutions in the nation related to fraudulent cardiovascular genetic testing, a burgeoning scheme. As alleged in court documents, medical professionals made referrals for expensive and medically unnecessary cardiovascular and cancer genetic tests, as well as durable medical equipment. For example, cardiovascular genetic testing was not a method of diagnosing whether an individual presently had a cardiac condition and was not approved by Medicare for use as a general screening test for indicating an increased risk of developing cardiovascular conditions in the future.
One case involves the operator of several clinical laboratories, who was charged in connection with a scheme to pay more than $16 million in kickbacks to marketers who, in turn, paid kickbacks to telemedicine companies and call centers in exchange for doctors’ orders. As alleged in court documents, orders for cardiovascular and cancer genetic testing were used by the defendant and others to submit over $174 million in false and fraudulent claims to Medicare—but the results of the testing were not used in treatment of patients. The defendant allegedly laundered the proceeds of the fraudulent scheme through a complex network of bank accounts and entities, including to purchase luxury vehicles, a yacht, and real estate. The indictment seeks forfeiture of over $7 million in United States currency, three properties, the yacht, and a Tesla and other vehicles.
Some of the defendants charged in this enforcement action allegedly controlled a telemarketing network, based both domestically and overseas, that lured thousands of elderly and/or disabled patients into a criminal scheme. The owners of marketing organizations allegedly had telemarketers use deceptive techniques to induce Medicare beneficiaries to agree to cardiovascular genetic testing, and other genetic testing and equipment.
“The Centers for Medicare & Medicaid Services continues to aggressively investigate fraud, waste, and abuse and has taken action to protect patients, critical health care resources and to prevent losses to the Medicare Trust Fund,” CMS Administrator Chiquita Brooks-LaSure said in the announcement. “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.”
The charges announced on Wednesday allege that the telemedicine companies arranged for medical professionals to order these expensive genetic tests and durable medical equipment regardless of whether the patients needed them, and that they were ordered without any patient interaction or with only a brief telephonic conversation. Often, these test results or durable medical equipment were not provided to the patients or were worthless to their primary care doctors.
The Justice Department said the charges build on prior telemedicine enforcement actions involving over $8 billion in fraud. Prior to the most recent charges and since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 16 strike forces operating in 27 districts, has charged more than 5,000 defendants who collectively billed federal health care programs and private insurers approximately $24.7 billion.
OIG warns providers about telemedicine scams
Meanwhile, in the wake of the DOJ announcement, the Office of Inspector General (OIG) has issued a special fraud alert notifying practitioners to beware when considering arrangements with so-called telemedicine companies. Suspected fraudulent behavior and characteristics may include:
- The patient was recruited by a telemedicine company, telemarketing company, sales agent, recruiter, call center, health fair, and or through internet, television, or social media advertising for free or low out-of-pocket cost items or services.
- The provider does not have sufficient contact with or information from the alleged patient to meaningfully assess the medical necessity of the items or services ordered or prescribed.
- The telemedicine company compensates the provider based on the volume of items or services ordered or prescribed, which may be characterized to the practitioner as compensation based on the number of medical records that the practitioner reviewed.
- The telemedicine company only furnishes items and services to federal health care program beneficiaries and does not accept insurance from any other payer.
- The telemedicine company claims to only furnish items and services to individuals who are not federal health care program beneficiaries but may in fact bill federal health care programs.
- The telemedicine company only furnishes one product or a single class of products (e.g., durable medical equipment, genetic testing, diabetic supplies, or various prescription creams), potentially restricting a practitioner's treating options to a predetermined course of treatment.