DOJ makes 36 arrests in $1.2B telemedicine fraud scheme

Thirty-six people were arrested by the United States Department of Justice (DOJ) for their roles in a $1.2 billion healthcare fraud scheme that spanned telemedicine, cardiovascular and cancer genetic testing and durable medical equipment (DME). Defendants in the case allegedly defrauded the Centers for Medicare and Medicaid (CMS) for millions of dollars that were spent on luxury vehicles, real estate and more. 

In addition, CMS announced administrative actions against 52 providers for similar schemes.

Among the law enforcement actions includes criminal charges against a telemedicine company executive, owners and executives of clinical laboratories, durable medical equipment companies, marketing organizations and medical professionals. In its crackdown of the case, the DOJ seized $8 million in cash, luxury vehicles and other proceeds from the fraud.

The scheme involved payment of illegal kickbacks and bribes by lab owners and operators in exchange of patient referrals from medical professionals of fraudulent telemedicine and digital medical technology companies. The telemedicine part of the scheme accounted for $1 billion of the total $1.2 billion fraud uncovered by the DOJ. The charges announced by the agency include some of the first prosecutions for fraudulent cardiovascular genetic testing, which the DOJ called “a burgeoning scheme.”

Under the scheme, medical professionals allegedly made referrals for expensive and medically unnecessary cardiovascular and cancer genetic tests and DME. Medical professionals referred for cardiovascular genetic testing when it was not a method for diagnosing a current cardiovascular condition and was not approved by Medicare for use as a general screening test to determine an increased risk of cardiovascular conditions in the future. Several federal agencies were involved in the indictment.

“Protecting the American people is at the forefront of the FBI’s mission,” Assistant Director Luis Quesada of the FBI’s Criminal Investigative Division said in a press release. “Fraudsters and scammers take advantage of telemedicine and use it as a platform to orchestrate their criminal schemes. This collaborative law enforcement action shows our dedication to investigating and bringing to justice those who look to exploit our U.S. healthcare system at the expense of patients."

Among those arrested includes the operator of several clinical laboratories who was charged for allegedly scheming to pay $16 million in kickbacks to marketers, who then paid kickbacks to telemedicine companies and call centers in exchange for doctors’ orders, the DOJ alleged. Orders for cardiovascular and cancer genetic testing allegedly topped $174 million in false and fraudulent claims to Medicare. The results of these tests were not used in treatment of patients. The defendant then allegedly laundered the money through a complex network of bank accounts and entities, and purchased luxury vehicles, a yacht and real estate. The Justice Department is seeking $7 million in forfeiture, as well as three properties, the yacht, a Tesla and other vehicles. 

Others in the indictment allegedly lured elderly Medicare beneficiaries to agree to cardiovascular genetic testing and other genetic testing and equipment. 

The DOJ has gone after $8 billion in fraud from telemedicine over the past few years, including this most recent case. The enforcement actions come as regulators loosened telemedicine rules since the onset of the COVID-19 pandemic to allow for more healthcare to be conducted digitally and reduce the risk of exposure and spread of the virus. 

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