On Wednesday, September 30, 2020, the Department of Justice (DOJ), along with the Federal Bureau of Investigation (FBI), Department of Health and Human Services Office of Inspector General (HHS-OIG), and the Drug Enforcement Administration (DEA) announced enforcement actions involving 345 individuals across 51 districts in what the U.S. government described as the “largest healthcare fraud takedown in the agency’s history.” Collectively, the cases announced in this nationwide enforcement operation alleged more than $6 billion in false and fraudulent claims to private insurers and federal healthcare programs. Notably, the largest portion of the alleged fraud – some $4.5 billion – relates to schemes involving telemedicine, the provision of healthcare services remotely, rather than in person, through the use of the internet or phone. Those charged in the telemedicine schemes include more than 100 physicians, nurses and other medical professionals, including telemedicine company executives.
In publicizing the takedown, the government noted that while telemedicine can foster “efficient, high-quality care” – particularly during the COVID-19 pandemic – certain bad actors can mislead beneficiaries and subsequently defraud the government with “aggressive marketing techniques.”
For example, in one case brought by the United States Attorney’s Office for the District of Montana, a nurse practitioner was charged in connection with an alleged healthcare fraud scheme involving the submission of more than $18 million in false and fraudulent claims. The defendant allegedly signed orthotic brace prescriptions for pre-selected braces while working for a telemedicine company (1) regardless of medical necessity, (2) in the absence of a pre-existing medical provider-patient relationship, (3) without a physical examination, and (4) frequently based solely on a short telephonic conversation or with no interaction at all with beneficiaries.
Non-medical professionals were also charged in the announced cases as well. In the Eastern District of Tennessee, the owner of a marketing company was charged with allegedly paying illegal kickbacks and bribes to telemedicine companies in order to obtain doctors’ orders for “medically unnecessary” cancer genomic (“CGx”) testing. The executive also allegedly paid his marketing employees to directly recruit, recommend and refer Medicare beneficiaries to provide samples of their genetic material in the form of CGx test kits and to sign medical documentation provided by the marketer. The marketing executive allegedly paid one employee $6,200 via check and in the memorandum line stated “31 kits 1099.” This scheme allegedly caused the submission of false claims.
The court filings pertaining to the 345 individuals charged have been unsealed and are available here.
While the conduct alleged by the government in these cases is brazen, there are lessons to be learned from these actions. First, telemedicine providers, physicians, durable medical equipment (“DME”) companies, diagnostics companies, and pharmacies should ensure they have appropriate procedures in place to identify legitimate business partners from those unscrupulous individuals who are simply trying to take advantage of the current situation for their own respective financial gain. Specifically, such companies should ensure they have robust compliance programs that include, among other things, education for employees regarding spotting prohibited conduct and auditing in risk areas such as the offer or acceptance of kickbacks, the prescription or ordering of services that are not medically necessary, and the prescribing or ordering of items or services without patient interaction that is sufficient to satisfy applicable standards of care. Second, not all of the government’s cases in this take-down arise from services and items furnished to beneficiaries of federal healthcare programs like Medicare and Medicaid. Thus, these actions should serve as a reminder that even when the alleged conduct only impacts commercial payors (as opposed to federal healthcare program payors), the conduct is still subject to various federal laws that prohibit bribes and kickbacks.