Telemedicine Providers Charged in Medicare Fraud Investigation

Five telemedicine providers have been charged by federal officials in a massive Medicare fraud scheme that has reportedly cost the agency more than $1.2 billion.

By Eric Wicklund

April 11, 2019 - Five telemedicine companies are at the center of what federal officials are calling one of the largest healthcare fraud cases in history, charged with facilitating virtual care sessions that cost Medicare roughly $1.2 billion in fraudulent charges.

The companies - Video Doctor USA, AffordADoc, Web Doctors Plus, Integrated Support Plus and First Care MD - “allegedly participated in an expansive and sophisticated fraud to exploit telemedicine technology meant for patients otherwise unable to access health care,” Assistant US Attorney General Benczkowski said in an April 9 press release from the Department of Justice.  

Charges have been filed against individuals and businesses in New Jersey, South Carolina, Florida, Texas, Pennsylvania and California.

According to federal officials, the telemedicine providers were allegedly part of a complex scheme in which healthcare providers and an international call center convinced Medicare beneficiaries that they needed back, shoulder, wrist and/or knee braces, regardless of medical necessity. Those braces were prescribed either without any sort of evaluation or a phone call and were channeled through more than 100 durable medical equipment (DME) companies.

“The international call center allegedly paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these Medicare beneficiaries,” the DOJ release noted. “The telemedicine companies then allegedly paid physicians to write medically unnecessary DME orders. Finally, the international call center sold the DME orders that it obtained from the telemedicine companies to DME companies, which fraudulently billed Medicare. Collectively, the CEOs, COOs, executives, business owners and medical professionals involved in the conspiracy are accused of causing over $1 billion in loss.”

The proceeds were allegedly laundered through international shell corporations and used to buy automobiles, yachts and real estate.

The DOJ was joined in the investigation by the FBI and the US Department of Health and Human Services’ Office of the Inspector General, executing more than 80 search warrants and charging 24 people.

In addition, the Center for Medicare & Medicaid Services’ Center for Program Integrity announced that it is taking “adverse administrative action” against 130 DME companies that had submitted over $1.7 billion in claims and were paid more than $900 million.

“The indictments we are unsealing today charge the defendants with running a complex, multilayered scheme to defraud our Medicare system and avoid detection by government regulators,” U.S. Attorney Craig Carpenito said in the press release. “The defendants took advantage of unwitting patients who were simply trying to get relief from their health concerns.  Instead, the defendants preyed upon their weakened state and pushed millions of dollars’ worth of unnecessary medical devices, which Medicare paid for, and then set up an elaborate system for laundering their ill-gotten proceeds.”

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