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Risk Fraud & Compliance

US charges 138 individuals in nationwide $1.4 billion healthcare-fraud crackdown

Melissa D. Berry  Lead Compliance Attorney Editor / Regulatory Intelligence / Thomson Reuters

· 5 minute read

Melissa D. Berry  Lead Compliance Attorney Editor / Regulatory Intelligence / Thomson Reuters

· 5 minute read

In a coordinated crackdown, the government recently charged multiple people, including medical personnel, in various healthcare fraud schemes worth about $1.4 billion in alleged losses

Criminal organizations continue to reinvent themselves as they test the boundaries of the U.S. governments’ fraud detection and prevention controls. Whether exploiting the COVID-19 pandemic through telehealth fraud or continuing to illegally prescribe opioids, these organizations continue their illicit work. However, law enforcement is on to them, as we now are seeing a major crackdown on healthcare fraud schemes.

The U.S. Department of Justice (DOJ) recently charged 138 defendants, including 42 doctors, nurses and other licensed medical professions in a coordinated crackdown on various healthcare fraud schemes. The schemes spanned 31 federal districts across the country and involved approximately $1.4 billion in alleged losses, most of which were related to telemedicine fraud.

The alleged losses include $1.1 billion relating to fraud committed through telemedicine schemes, $29 million in COVID-19 healthcare fraud, $133 million involving substance abuse treatment facilities or “sober homes”, and $160 million connected to other healthcare fraud and illegal opioid distribution schemes.

“This nationwide enforcement action demonstrates that the Criminal Division is at the forefront of the fight against healthcare fraud and opioid abuse by prosecuting those who have exploited healthcare benefit programs and their patients for personal gain,” said Assistant Attorney General Kenneth A. Polite Jr. of the DOJ’s Criminal Division in a press release. “The charges announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of healthcare benefit programs, even amid a continued pandemic.”

The cases were led by the DOJ’s Criminal Division’s Healthcare Fraud Unit.

Telemedicine fraud cases

Schemes involving telemedicine resulted in charges against 43 criminal defendants in 11 judicial districts for allegedly submitting false and fraudulent claims involving more than $1.1 billion.

Certain defendant telemedicine executives allegedly paid doctors and nurse practitioners to “order unnecessary durable medical equipment, genetic and other diagnostic testing, and pain medications” without any patient interaction or after only a “brief telephonic conversation” with patients they had never treated, according to the DOJ.

Durable medical equipment companies, genetic testing labs and pharmacies then purchased those orders in exchange for illegal kickbacks and bribes. Using the orders, they submitted more than $1.1 billion in false and fraudulent claims to Medicare and other government insurers.

Proceeds from the scheme were spent on “luxury items, including vehicles, yachts, and real estate.”

Pandemic-related fraud cases

Nine of the defendants allegedly engaged in various healthcare fraud schemes “designed to exploit the COVID-19 pandemic.” These schemes involved the submission of more than $29 million in false claims.

One scheme took advantage of the regulations to expand access to telehealth services. The defendants allegedly misused patient information to submit claims to Medicare for “unrelated, medically unnecessary, and expensive laboratory tests, including cancer genetic testing.”

Another five defendants allegedly misused Provider Relief Fund money intended to provide needed medical care to Americans with COVID-19. These defendants allegedly used the money for personal expenses including gambling at a Las Vegas casino and paying a luxury car dealership.

Sober home cases

Involving $133 million in false and fraudulent claims, the charges involving sober homes include allegations of “illegal kickback and bribery schemes involving the referral of patients to substance abuse treatment facilities.” In these schemes, vulnerable patients seeking treatment for drug and/or alcohol addiction were subject to medically unnecessary drug testing that was then billed at thousands of dollars per test. The defendants also billed for therapy sessions that “frequently were not provided.”

Traditional healthcare fraud cases 

Charges involving the illegal prescription and/or distribution of opioids were brought against 19 defendants who allegedly prescribed more than 12 million doses of opioids and other narcotics. These defendants submitted more than $14 million in false claims.

Charges involving traditional healthcare fraud were brought against 60 defendants who allegedly submitted more than $145 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for “treatments that were medically unnecessary and often never provided.”

Healthcare fraud remains a focal point for the DOJ as cases rise and fraudsters look for new ways to exploits vulnerabilities and weaknesses in legacy systems. Federal, state, and local governments continue to look for ways to ensure our most vulnerable populations are getting the healthcare they need, including utilizing technologies to level the playing field against tech-savvy criminal organizations.