Healthcare Fraud Scheme Leads to $1.2 billion in Medicare Losses

One of the largest healthcare fraud schemes in history was finally brought down after 24 people – including executives of several telemedicine and DME (durable medical equipment) companies and three licensed medical practitioners – were arrested last week.

A joint investigation conducted by the FBI and HHS (Health & Human Services) found the scheme operated nation-wide and resulted in approximately $1.2 billion in Medicare losses. The alleged scheme involved DME company payment of bribes and kickbacks to medical providers, who worked in conjunction with corrupt telemedicine companies, in exchange for referral of Medicare clients for back, shoulder, knee and ankle braces that were not medically necessary.

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“The defendants took advantage of unwitting patients who were simply trying to get relief from their health concerns,” said U.S. Attorney for New Jersey Craig Carpenito in a statement. “Instead, the defendants preyed upon their weakened state and pushed millions of dollars’ worth of unnecessary medical devices, which Medicare paid for, and then set up an elaborate system for laundering their ill-gotten proceeds.”

Authorities believe that these medical providers did not actually interact with these patients beyond a brief phone call and, in exchange for payment, would prescribe braces ordered specifically from these specific durable medical equipment companies. Some of those charged are alleged to have used overseas call centers to advertise “free or low-cost” braces to Medicare patients regardless of medical need. The call center would contact a medical provider to write an order for a brace, and then pay a kickback to these “telemedicine” companies to fulfill prescriptions for the superfluous supportive device.

According to the U.S. Department of Justice, certain individuals ran an “international telemarketing network that lured over hundreds of thousands of elderly and/or disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and through Latin America”.

The Center for Medicare Services’ Center for Program Integrity has also taking legal action against 130 DME companies that received $900 million in Medicare money for fraudulent claims.

“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,” Assistant Attorney General Brian A. Benczkowski said in a statement.

“This Department of Justice will not tolerate medical professionals and executives who look to line their pockets by cheating our health care programs. I commend the Criminal Division of prosecutors and our partners from the US Attorney’s Offices and law enforcement agencies across the country for their unrelenting efforts to stop this alleged fraud before more money was stolen from American taxpayers.”