Healthcare workers charged in $1.1 billion telehealth fraud scheme

Federal prosecutors allege that more than 40 healthcare workers across the U.S. have filed $1.1 billion in false or fraudulent telehealth claims to Medicare and other government insurers since August 2020.

Telemedicine executives allegedly paid 43 doctors and nurse practitioners to order unnecessary durable medical equipment, diagnostic and genetic tests and pain medicines with little to no telephone or virtual interactions with patients, according to a news release issued by the Justice Department on Friday.

Durable medical equipment companies, labs and pharmacies then purchased those orders from telehealth executives in exchange for illegal kickbacks and bribes. Executives submitted $784 million in false claims for durable medical equipment to Medicare, federal prosecutors said. Fraudsters spent the proceeds from the scheme on cars, yachts, real estate and other luxury items, the release said. The DOJ did not name the defendants.

“We have seen all too often criminals who engage in healthcare fraud—stealing from taxpayers while jeopardizing the health of Medicare and Medicaid beneficiaries,” Gary Cantrell, deputy inspector general for investigations at the HHS’ Office of Inspector General, said in a statement.

Regulators’ crackdown of healthcare workers’ use of telehealth is part of a group of investigations—with claims totaling $1.4 billion—that accuse 138 defendants of engaging in fraud related to the COVID-19 pandemic, operation of substance abuse treatment facilities and distributing opioids illegally, the DOJ said on Friday. The DOJ seeks to recoup $29 million for cases related to COVID-19, $133 million connected to scams involving sober homes and $160 million for illegal opioid distribution and other fraud schemes.

Nine defendants have been charged in cases related to the COVID-19 pandemic, the release said. In one instance, individuals allegedly misused patient information and exploited expanded telehealth regulations to submit medically unnecessary claims for expensive lab tests to Medicare.

Another five defendants also defrauded the provider relief fund, using federal cash to gamble at Las Vegas casinos and pay a luxury car dealership, instead of support clinician operations during COVID-19. The defendants apparently did not operate a medical practice, prosecutors said.

“Every dollar saved is critical to the sustainability of our Medicare programs and meeting the needs of seniors and people with disabilities,” Centers for Medicare and Medicaid Services Administrator Chiquita Brooks-LaSure said in a statement.

Another group of defendants also submitted $133 million in false and fraudulent claims for treatment at substance abuse facilities to private insurers, the release said. These cases range from brokers allegedly receiving kickbacks and bribes from substance abuse facilities to refer patients their way, to clinicians subjecting patients to unnecessary, and expensive, drug testing, to healthcare facilities submitting bills for patient therapy sessions that were never provided.

Patients’ treatment at substance abuse facilities was not the only area federal regulators targeted.

The DOJ also announced cases against 19 defendants for prescribing more than 12 million doses of opioids and other narcotics and submitting more than $14 million in false bills. Another 60 defendants allegedly submitted bills for $145 million to Medicare, Medicaid, TRICARE and private insurers for healthcare services that were medically necessary and, often, never provided.


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