A recent telemedicine fraud case from the United States Department of Justice highlights the ongoing legal quagmires that healthcare companies are facing when implementing new digital health ventures.

Specifically, the Department of Justice has reported that Acacia Mental Health Clinic and its CEO, Abraham Freund, have agreed to pay $4M for allegedly violating the False Claims Act by submitting claims for urine drug tests and telemedicine services. According to the government, “Acacia, at Freund’s direction, submitted claims to Medicaid for telemedicine services rendered to Acacia’s patients by psychiatrists located outside the United States, in violation of Medicaid regulations.”

This is a relatively new theory of liability for telemedicine services that could restrict physicians from providing telemedicine services when the physician is physically located off US soil at the time of service delivery—even if the patient was located on US soil at the time of service delivery.   

It is important to note that the enforceability of this new theory of liability is in question because this restriction on the physical location of the physician is not expressly defined in any US statutes or regulations. There is a US statute indicating that a patient who leaves the US to receive treatment in another country will not be eligible for payment for those services under Medicare and Medicaid. However, that statute does not expressly address situations in which the patient stays in the US and receives a telemedicine consult from a physician who is incidentally located outside the US at the time of service delivery.

Regardless of this ambiguity in the statute, Medicare (through the Centers for Medicare and Medicaid Services and the Department of Justice) has published various informal “notices” and has filed various complaints and amicus briefs indicating that Medicare is interpreting this statutory payment restriction to apply to telemedicine services even if the patient is physically located in the United States at the time of service delivery.  And, while Medicare has done this all outside the enforceable legislative and regulatory process, it is important to be aware of Medicare’s informal stance on this issue.

Thus, to manage this potential risk and current lack of clarity in the law, one option for healthcare companies is to consider implementing policies or agreements with their physicians who provide healthcare services through technology (i.e., through phone, video, email, etc.) that restrict the physical location of the physician to US soil at the time of service delivery.