On Friday, September 17, 2021, the Department of Justice announced criminal charges against 138 defendants, consisting of 42 doctors, nurses, and other medical professionals in 31 federal districts across the United States. The charges are based on the defendants’ alleged participation in various healthcare fraud schemes totaling approximately $1.4 billion in alleged losses. Of those losses, approximately $1.1 billion resulted from telemedicine fraud, $29 million in COVID-19 healthcare fraud, $133 million from fraud involving substance abuse treatment facilities, and $160 million related to illegal opioid distribution and other healthcare fraud across the U.S.
Telemedicine fraud accounts for the largest portion of alleged fraud loss in the DOJ’s announcement. Telemedicine is the use of telecommunications technology to provide healthcare services remotely. Court documents indicate that, among 43 defendants in 11 judicial districts, specific defendant telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary durable medical equipment, diagnostic testing, and pain medications, either without any patient interaction or after only a brief telephone conversation with patients they had never met or seen. The equipment companies, testing laboratories, and pharmacies then executed those orders in exchange for illegal kickbacks and bribes, resulting in over $1.1 billion in fraudulent claims to Medicare and other government insurers. The focus on prosecuting telemedicine healthcare fraud schemes continues from the telemedicine focus of the 2019 “Operation Brace Yourself” Telemedicine and Durable Medical Equipment Takedown, which resulted in an estimated cost avoidance of over $1.9 billion paid by Medicare for orthotic braces in the 20 months following that takedown.
The COVID-19 fraud cases involve nine defendants who are alleged to have exploited the COVID-19 pandemic by submitting over $29 million in false billings. In one scheme, the defendants allegedly exploited the Centers for Medicare & Medicaid Services (CMS) expanded policies established to increase access to care during the pandemic. Similar to the telemedicine cases, defendants allegedly used patient information to submit claims to Medicare for unrelated, medically unnecessary, and expensive laboratory testing. The COVID-19 cases also include criminal charges against five defendants who allegedly abused funds from the Provider Relief Fund, which is part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a federal law enacted in March 2020 that designed to provide needed medical care to Americans suffering from COVID-19. The defendants allegedly abused the funds by using the disbursed money for personal expenses, including gambling and purchasing a luxury car.
The remaining $133 million and $160 million in fraud schemes resulted from illegal kickback and bribery schemes involving patient referrals to substance abuse treatment facilities and opioid-related or traditional healthcare fraud schemes, respectively. Deemed the “sober home cases,” defendants are being prosecuted for referring patients to substance abuse treatment facilities where those patients could undergo medically unnecessary drug testing, costing thousands for a single test, and therapy sessions that were frequently not provided, resulting in millions in false claims being submitted to private insurers. The illegal prescription and distribution of opioids involves 19 defendants who allegedly prescribed over 12 million doses of opioids and other prescription narcotics, while submitting over $14 million in false billings. Lastly, the remaining cases involve traditional forms of healthcare fraud involving over 60 defendants who allegedly submitted over $145 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for treatments that were medically unnecessary and often never provided.
The cases, which span the country, are being prosecuted by the DOJ’s Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force teams from the Criminal Division’s Fraud Section, in coordination with 31 U.S. Attorneys’ Offices nationwide, and agents from the Department of Health and Human Services Office of Inspector General (HHS-OIG), FBI, Drug Enforcement Administration (DEA), and other federal and state law enforcement agencies. Gary L. Cantrell, Deputy Inspector General for Investigations of HHS-OIG, warns, “[O]ur agency and its law enforcement partners remain unrelenting in our commitment to rooting out fraud, holding bad actors accountable, and protecting the millions of beneficiaries who rely on federal health care programs.”
As indicated in the announcement, “A complaint, information or indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.”
For more information, please contact Madison M. Pool, Kara G. Silverman, or Kadeja A. Watts.