Three Dozen Charged in $1.2 Billion Healthcare Fraud Scheme

The U.S. Department of Justice, through coordinated investigations across 13 districts, has filed criminal charges against three dozen defendants who allegedly were involved in $1.2 billion in fraudulent telemedicine, cardiovascular and cancer genetic testing, and durable medical equipment schemes.

Those charged include a telemedicine company executive, owners and executives of clinical laboratories, durable medical equipment companies, marketing organizations and medical professionals.

The alleged schemes involved the payment of illegal kickbacks and bribes by laboratory owners and operators in exchange for patient referrals by medical professionals working with fraudulent telemedicine and digital medical technology companies. However, telemedicine schemes account for more than $1 billion of the total losses.

One burgeoning scheme is related to fraudulent cardiovascular genetic testing. In these cases, medical professionals made referrals for expensive and medically unnecessary cardiovascular and cancer genetic tests. As we previously wrote about the popularity of genetic testing has resulted in a significant increase in fraud.

In one case, the operator of several clinical laboratories was charged in connection with a scheme to pay more than $16 million in kickbacks to marketers who, in turn, paid kickbacks to telemedicine companies and call centers in exchange for doctors’ orders. As alleged in court documents, defendants used orders for cardiovascular and cancer genetic testing to submit more than $174 million in false and fraudulent claims to Medicare. However, the test results were not used to treat patients.

The clinical lab owner allegedly laundered the proceeds through a complex network of bank accounts and entities, including to purchase luxury vehicles, a yacht, and real estate. The indictment seeks forfeiture of more than $7 million, three properties, a yacht, a Tesla and other vehicles. 

Some of those charged allegedly controlled a telemarketing network, based both in the U.S. and overseas, that used deceptive techniques to induce Medicare beneficiaries to agree to cardiovascular genetic testing and other genetic testing and equipment.

The investigation builds on prior telemedicine enforcement actions involving more than $8 billion in fraud, including 2019’s Operation Brace Yourself, a months-long investigation that spanned 20 FBI field offices and involved several partner agencies; 2019’s Operation Double Helix; 2020’s Operation Rubber Stamp, and the telemedicine component of the 2021 National Health Care Fraud Enforcement Action.

The Operation Brace Yourself Telemedicine and Durable Medical Equipment Takedown alone resulted in an estimated cost avoidance of more than $1.9 billion in the amount paid by Medicare for orthotic braces in the 20 months following that enforcement action.

In addition to the criminal charges, the Centers for Medicare & Medicaid Services (CMS), Center for Program Integrity (CPI) announced that it took adverse administrative actions against 52 providers involved in similar schemes. In connection with the enforcement action, the department seized more than $8 million in cash, luxury vehicles, and other fraud proceeds.

Testing labs, physicians and other healthcare providers would be well advised to make sure any relationships they have comply with anti-kickback laws.  The Health Law Offices of Anthony C. Vitale can provide you with compliance oversight services, assuring that your business relationships are compliant with all federal and state fraud, waste and abuse laws.

The Health Law Offices of Anthony C. Vitale represents testing labs, physicians, detox and other healthcare providers facing investigations and charges. Contact us at 305-358-4500 or email info@vitalehealthlaw.com.