DOJ Charges 11 People in Telehealth Fraud Schemes Worth $2B

June 28, 2023 - The United States Department of Justice (DOJ) and federal and state law enforcement partners are charging 11 people in connection with telehealth fraud schemes that resulted in more than $2 billion in false claims.

The schemes are varied, including one indictment in the Southern District of Florida alleging that software and service company leaders generated and sold templates of clinicians' orders for orthotic braces and pain creams in exchange for kickbacks and bribes. These items were not medically necessary and not eligible for Medicare reimbursement.

Through this scheme, the CEO, former CEO, and vice president of business development of the companies submitted $1.9 billion in fraudulent claims to Medicare and other government insurers.

The scam involved a telemarketing operation that targeted elderly and disabled people. Through direct mail, television, and other advertisements, the fraud victims were encouraged to contact individuals offshore who sold them unnecessary medical equipment and prescriptions.

The defendants' platform enabled them to generate fraudulent orders for telehealth practitioners to sign, which falsely stated that the practitioners had seen the Medicare beneficiaries in person. These orders were submitted to Medicare, and the practitioners received kickbacks. The orders also falsified diagnostic testing that Medicare requires for brace orders.

Another telemedicine fraud scheme in the Eastern District of Washington involved a physician signing more than 2,800 false orders for orthotic braces. These included orders for patients who had already undergone limb amputations. The physician reportedly took less than 40 seconds to review and sign each order, the press release notes.

The telehealth-related charges are part of a two-week nationwide law enforcement action that resulted in criminal charges against 78 defendants for their alleged involvement in healthcare fraud schemes totaling $2.5 billion. The action includes charges against ten defendants who allegedly submitted $370 million in false claims related to prescription drugs and charges targeting $150 million in false billings connected to various types of fraud, including the illegal distribution of opioids.

"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," said Attorney General Merrick B. Garland in a press release. "The Justice Department will find and bring to justice criminals who seek to defraud Americans and steal from taxpayer-funded programs."

The Justice Department has seized or restrained millions of dollars in cash, automobiles, and real estate in connection with the enforcement action.

This action comes nearly a year after the Justice Department filed criminal charges against 36 defendants in telemedicine-enabled fraud schemes involving illegal kickbacks for genetic testing and durable medical equipment (DME).

The defendants included a telemedicine company executive and the owners and executives of several clinical laboratories, durable medical equipment companies, marketing organizations, and healthcare professionals. Overall, the losses linked to the kickbacks totaled more than $1.2 billion.

Amid the growing crackdown on telehealth fraud, waste, and abuse last year, the Department of Health and Human Services (HHS) Office of Inspector General (OIG) issued a special fraud alert that provided guidelines for collaborating with telehealth companies. The alert details potential indicators of fraud, including telehealth arrangements involving limited contact between a provider and a patient leading to poor evaluation of services.