Medicare fraud: Feds indict 35 in alleged $2.1 billion fraud scheme involving telemedicine

October 3, 2019

Federal investigators accuse dozens of telemedicine company and cancer genetic testing laboratory affiliates of alleged fraudulent billing scheme

The Department of Justice (DOJ) announced Sept. 27 the indictment of 35 people across the country on charges connected to allegedly fraudulently billing Medicare for more than $2.1 billion in what the department called the “largest healthcare fraud schemes ever charged.”                                  

At its core, the scheme seemed to be based on cancer genetic testing laboratories paying illegal bribes and kickbacks to medical professionals working with fraudulent telemedicine companies in exchange for referrals of Medicare beneficiaries for expensive unnecessary cancer genetic tests, according to a news release from the DOJ.

The defendants-including the owners of telemedicine companies, marketers who allegedly solicited the tests from Medicare beneficiaries, and nine physicians-would allegedly pay doctors to prescribe the testing without any patient interaction or with only a brief telephonic conversation. Once the tests were performed, the results were often not provided to the beneficiary or were worthless to their doctors, the release said.

Some defendants are also accused of allegedly controlling telemarketing networks that lured hundreds of thousands of elderly and/or disabled patients into the scheme, the release said.

Also, the Centers for Medicare & Medicaid Services’ (CMS) Center for Program Integrity announced Sept. 27 that it took adverse administrative action against cancer genetic testing companies and medical professionals who submitted over $1.7 billion in claims to Medicare, the release said.

The bevy of indictments comes as the culmination of coordinated investigations over the month of September led by the Criminal Division’s Health Care Fraud Unit which led to 380 individuals being charged with allegedly billing federal healthcare programs for more than $3 billion and prescribing or dispensing approximately 50 million controlled substance pills across Texas, the west coast, the gulf coast, the northeast, Florida, Georgia, and the Midwest.

“The defendants are alleged to have capitalized on the fears of elderly Americans in order to induce them to sign up for unnecessary or non-existent cancer screening tests,” Fajardo Orshan, U.S. Attorney for the Southern District of Florida says in the release. “The genetic testing fraud schemes put personal greed above the preservation of the American healthcare system.  The U.S. Attorney’s Office in South Florida, alongside our law enforcement and USAO partners, remains committed to protecting taxpayer dollars and the Medicare program from abuse.”

“We are honored to work every day alongside our law enforcement partners to stop the exploitation of vulnerable patients and misuse of taxpayer dollars,” CMS Administrator Seema Verma says in the release. “In order to prevent additional financial losses, CMS has taken swift action to protect the Medicare Trust Funds from the providers who allegedly have fraudulently billed over $1.7 billion. CMS continues to use a comprehensive and aggressive program integrity approach that includes fraud prevention, claims review, beneficiary education, and targeting high-risk areas of the federal healthcare programs with new tools and innovative demonstrations.”  

“Unfortunately, audacious schemes such as those alleged in the indictments are pervasive and exploit the promise of new medical technologies such as genetic testing and telemedicine for financial gain, not patient care,” Deputy Inspector General for Investigations Gary L. Cantrell, of HHS’s Office of the Inspector General, says in the release.  “Instead of receiving quality care, Medicare beneficiaries may be victimized in the form of scare tactics, identity theft, and in some cases, left to pay out of pocket.  We will continue working with our law enforcement partners to investigate those who steal from federal healthcare programs and protect the millions of Americans who rely on them.”

The cases are being tried in federal courts in the Southern District of Florida, the Eastern District of Louisiana, the Southern District of Georgia, the Northern District of Texas, the Middle District of Florida, the Middle District of Louisiana, and the District of New Jersey.