On February 20, 2025, a Kansas man pleaded guilty to operating an internet-based platform that generated fraudulent doctors’ orders, defrauding Medicare and other federal healthcare programs of over $1 billion. The platform targeted Medicare beneficiaries, misleading them through mailers, TV ads, and calls from offshore call centers to accept unnecessary items like orthotic braces and pain creams. The defendant coordinated illegal kickback transactions between pharmacies, suppliers, and telemedicine companies, which paid for doctors’ orders that falsely represented medical exams. The fraudulent claims led to Medicare paying over $360 million.
In another significant case on the same day, a Missouri physician pleaded guilty to making false statements about healthcare matters. Between January 2018 and December 2019, the defendant signed over 3,100 orders for cancer and pharmacological genetic tests and durable medical equipment. These actions led to over 8,700 claims submitted to Medicare, totaling $1.6 million in payments. Investigations revealed that patients, many of whom had never met the defendant, received unnecessary items like braces. Several of these patients were unaware of any medical need for the equipment, and some were provided multiple braces for different body parts. The defendant received compensation from a telehealth company for these orders, signing off without interacting with the patients.
Also on February 20, 2025, the owner of two durable medical equipment companies based in Massachusetts was charged in connection with a nearly $30 million fraud scheme. The defendant allegedly entered into contracts with telemarketing companies, which generated orders for medically unnecessary durable medical equipment, such as knee and back braces. These orders were often made without proper physician exams or knowledge, sometimes using fraudulent provider numbers. The defendant paid the telemarketers on a per-order basis, violating the Anti-Kickback Statute. The companies involved billed Medicare $29.6 million and received $15.8 million. Investigators seized luxury goods, including two Ferraris, a Mercedes-Benz Model S, and several Rolex watches, which were reportedly purchased with proceeds from the fraud.
Compliance Perspective
Issue
The Office of Inspector General (OIG) has conducted numerous investigations into fraud schemes involving companies and individuals exploiting the growing use of telehealth, telemedicine, or telemarketing services. These schemes pose serious risks to federal healthcare programs and their beneficiaries, which may include:
- An increase in costs for medically unnecessary items and services, including those never received by beneficiaries.
- Harm to beneficiaries through unnecessary treatments, items that may cause harm, or delays in necessary care.
- Corruption of medical decision-making, including fraudulent prescribing, testing, and medical equipment orders.
Practitioner arrangements with telemedicine companies can lead to criminal, civil, or administrative liability under federal laws, including the federal Anti-Kickback Statute, the OIG’s exclusion authority, the Civil Monetary Penalties Law for kickbacks, the criminal healthcare fraud statute, and the False Claims Act.
Discussion Points
- Review facility policies on telemedicine to ensure they effectively safeguard against fraud, waste, and abuse. Make sure they emphasize compliance with legal requirements and that identifying and reporting fraudulent claims or kickbacks is integrated into the compliance program.
- Provide education to nursing and business office staff about their responsibility to identify and report concerns regarding unnecessary medications, treatments, supplies, or equipment. Ensure that training on fraud, waste, and abuse includes the prohibition of accepting illegal kickbacks or bribes for ordering medical equipment, lab tests, or prescriptions. Staff should be aware of their obligation to report suspicious activities to supervisors or via the facility’s hotline.
- Conduct routine audits to verify the appropriate use of telemedicine services and ensure staff are not involved in bribery or kickbacks. Regularly assess staff awareness of their responsibility to report compliance issues and ensure they know how to report concerns to supervisors, the compliance officer, or anonymously via the hotline.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*
