DOJ ‘takedown’ charges 86 defendants with $4.5 bn in fraudulent telemedicine claims in largest ever action

We unpack the 2020 National Health Care Fraud and Opioid Takedown. Closing out September was the largest simultaneous group of Department of Justice (DOJ) and Federal agency coordinated actions concerning fraudulent medical claims. The indictments charged 345 defendants, including 100 medical professionals, across 51 federal districts, for submitting fraudulent claims against Medicare and private insurance programs totaling over $6 bn.

The vast bulk–$4.5 bn–of the fraudulent claims were classified as ‘telemedicine’ and were perpetrated by more than 86 criminal defendants in 19 judicial districts. The remainder of the charges rounding to the $6 bn were for substance abuse treatment and opioid distribution fraud: more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country. 

These ‘telemedicine’ claims included unnecessary durable medical equipment (DME), genetic or diagnostic testing, and prescription drugs. The typical scam worked like this:

  • Telemedicine company executives paid doctors and nurse practitioners to order unnecessary durable medical equipment, genetic and other diagnostic testing, and medications, often for pain, for patients
  • The patient for whom it was ordered had either no contact with the doctor or nurse practitioner or only a brief telephonic conversation. The person may not have been a patient of the practice.
  • DME companies, genetic testing laboratories, and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes, then submitted false and fraudulent claims to Medicare, state Medicaid, and private insurers which are Medicare Advantage plan sponsors

Most of the Federal charges in the indictments here cite Federal anti-kickback statutes in both criminal and civil law.

The nationwide charges were executed by an alphabet soup of agencies at the Federal level:

  • Enforcement actions were by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the US Attorneys’ Offices, Department of Health and Human Services Office of Inspector General (HHS-OIG), the FBI, and the Drug Enforcement Agency (DEA)
  • Prosecution is by Health Care Fraud and ARPO Strike Force teams from the DOJ’s Criminal Division’s Fraud Section, 43 US Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various Federal and state law enforcement agencies. 

Unpacking the actions which reveal some dizzying schemes, some of the more interesting individual cases against fraudulent ‘telemedicine’ in the 2020 National Health Care Fraud and Opioid Takedown took place in Florida and Illinois:

  • Middle District of Florida: a telemarketing operation collected the personal information of Medicare beneficiaries, purchased doctor’s orders for orthotic braces, and then submitted more than $25 million in claims to Medicare
  • Southern District of Florida: three telemedicine executives and three owners of durable medical equipment companies were charged and pled guilty in connection with more than $175 million in fraud loss
    • Editor’s note: none of the principals of QuivvyTech have been identified by this Editor in the ‘Takedown’ indictments and corresponding information documents listed for the Southern District. Humana’s civil suit against QuivvyTech is here [TTA 27 August]. 
  • Northern District of Illinois: seven defendants were charged with defrauding insurance programs of more than $205 million. One is a very busy doctor who, according to the indictment, was the top prescriber in the United States for multiple genetic testing billing codes. He worked for more than 10 telemedicine companies, was licensed in 17 states, and allegedly paid five of his friends and relatives to sign telemedicine orders in his name for medically unnecessary genetic testing and durable medical equipment. “In total, the scheme allegedly resulted in $145 million in false and fraudulent claims billed to Medicare and approximately $54.6 million paid by Medicare for claims associated with this doctor’s name.” 
  • Your Editor cannot resist the twist that ‘telemedicine’ fraud took in her home state of New Jersey. Two cases involving telemarketing, senior health fairs, and door-to-door sales (!) of genetic testing, including genetic cancer screening, had a total fraud value of nearly $1bn. A multi-jurisdictional case involving the District of New Jersey, the Middle District of Florida, and the Southern District of California also involved the ordering of orthotic braces signed off by ‘telemedicine’ doctors who didn’t speak or only briefly spoke to Medicare beneficiaries/members. $871 million purchased a great deal of real estate, personal luxury items, and nightlife events for the two owners of the DME companies involved, who incidentally entered guilty pleas.

A biotech extra. In the list of multi-jurisdictional actions is a scheme to mislead investors, manipulate a biotechnology company’s stock price, and defraud payers for COVID-19 and allergy testing. The company named in the complaint is Arrayit Corporation, a publicly-traded company (OTC) located in Sunnyvale, California. This was jointly prosecuted by the National Rapid Response Strike Force, the Market Integrity and Major Fraud Unit of DOJ’s Fraud Section, and the US Attorney’s Office for the Northern District of California. The separate Securities and Exchange Commission (SEC) charges on the veracity of their COVID-19 test is here. For those with a speculative bent, the current value of the stock is zero.

DOJ press release. Also FierceHealthcare’s overview.

Editor’s note: ‘Telemedicine’ has been placed in quotes to differentiate these scams from legitimate provider-patient telemedicine video/audio consults or telephonic medical visits which may involve patient diagnosis and prescribing. These are now more frequently called telehealth. The differentiation is already well understood by our professional Readers and is made for the benefit of our non-professional Readers who may view this article on Twitter and LinkedIn feeds, or via Google search. 

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