On July 30, 2026, Michael Kochen and Sandro Herek were sentenced to 17 years (204 months) and 7 years, 8 months (92 months), respectively, in federal prison for their roles in a $35 million Medicare Advantage fraud scheme involving medically unnecessary durable medical equipment (DME). The defendants were convicted by a federal jury on December 22, 2025, following trial.
The case exemplifies a fact pattern that the Department of Justice (DOJ) and the Department of Health and Human Services Office of Inspector General (HHS-OIG) have repeatedly identified as a top enforcement priority. The scheme combined deceptive telemarketing targeting elderly beneficiaries, telehealth-generated medical necessity documentation, and unlawful kickback arrangements between DME companies and telemedicine companies.
How the $35 Million Medicare Advantage DME Fraud Scheme Worked
The evidence at trial established that Kochen owned dozens of DME supply companies and orchestrated a scheme to submit approximately $35 million in false and fraudulent claims to Medicare Advantage plans for medically unnecessary back, knee, shoulder, and ankle braces. Medicare Advantage plans paid more than $19 million on these fraudulent claims.
The scheme operated through three components:
A. Deceptive Telemarketing Targeting Elderly Beneficiaries
Call-center representatives repeatedly contacted Medicare Advantage beneficiaries, often after initial refusals, using high-pressure tactics to induce acceptance of braces regardless of whether the beneficiaries had any medical need. Marketing scripts falsely represented that the braces were “free.”
B. Sham Telehealth Prescriptions
Physicians frequently issued standardized, boilerplate medical authorizations based solely on call recordings, rather than individualized medical evaluations. In many instances, physicians never spoke with beneficiaries at all. When telephone calls did occur, they were brief and lacked any meaningful medical necessity assessment.
C. Illegal Kickbacks Between DME Companies and Telemedicine Companies
Kochen paid kickbacks to telemedicine companies to obtain prescription orders for braces for Medicare Advantage beneficiaries. These kickback-generated prescriptions were then used to submit fraudulent claims to Medicare Advantage plans. Kochen also paid kickbacks to Herek and others to recruit beneficiaries into the scheme.
What the Government Was Most Interested In and Why
This scheme archetype is among the most common in the federal health care fraud landscape with respect to telehealth. The use of telehealth allows stakeholders to scale rapidly, generating tens to hundreds of millions of dollars in fraudulent claims without ever examining a patient. The government views this not as an isolated billing dispute but as an organized scheme to exploit systemic vulnerabilities in telehealth-enabled ordering.
The sentencing in this case reinforces the government’s focus and intent to continue to prosecute telemedicine fraud cases aggressively, and the overall enforcement trends indicate the same.
- 2025 Takedown: In 2025, the DOJ charged 324 defendants, including 96 doctors, nurse practitioners, pharmacists, and other licensed professionals, across 50 federal districts, for schemes involving over $14.6 billion in intended fraud losses, the largest health care fraud takedown in DOJ history at that time.
- 2026 Takedown: On June 23, 2026, the DOJ announced the results of the 2026 National Health Care Fraud Takedown: 455 defendants charged (including 90 doctors and licensed professionals) in 56 federal districts across 45 U.S. states and territories, involving over $6.5 billion in alleged fraud. Fifty state Medicaid Fraud Control Units participated, the largest number ever involved in a DOJ health care fraud takedown. CMS suspended 1,079 providers and revoked billing privileges for 1,403 providers. Over 1,400 providers were excluded from federal health care programs.
In the 2026 Takedown, 49 defendants were charged in connection with over $1.17 billion in allegedly fraudulent claims tied specifically to telemedicine and genetic testing fraud schemes. One Southern District of Florida case in that Takedown involved a $46 million scheme where beneficiaries were targeted via deceptive telemarketing, and fraudulent claims were submitted for DME and genetic tests. The DOJ stated it “continues to focus on eliminating health care fraud schemes that depend on telemedicine, including schemes involving fraudulent claims for genetic testing, durable medical equipment, and COVID-19 tests.”
These cases illustrate the DOJ’s and HHS-OIG’s sustained commitment to pursuing telehealth-enabled DME and genetic testing kickback schemes as a top enforcement category, with severe consequences including multi-year prison terms, restitution in the tens of millions of dollars, asset forfeiture, and lengthy program exclusions.
Compliance Recommendations for Telehealth Companies, DME Suppliers, and Marketing Vendors
Given this trajectory, stakeholders across the telehealth and DME ecosystem should treat compliance review as a priority, not an afterthought. Importantly, stakeholders who do not submit claims to federal payors should not consider themselves completely outside the reach of prosecutors; numerous state-specific kickback prohibitions can apply even to cash-based business models, and those stakeholders should also consult with counsel regarding their compliance obligations.
Telehealth companies, DME suppliers, marketing and lead-generation vendors, and other stakeholders in this space should take the following steps:
- Engage competent regulatory and health care fraud counsel to conduct a comprehensive review of your compliance program, with particular attention to Anti-Kickback Statute exposure in referral relationships with telemedicine companies, marketing intermediaries, and lead-generation vendors.
- Audit your prescription-generation and medical necessity documentation practices to ensure that telehealth encounters are genuine, individualized physician-patient interactions, not boilerplate authorizations driven by telemarketing referrals.
- Review all marketing and telemarketing practices for compliance with applicable federal and state consumer protection, telemarketing, and health care fraud statutes, including whether marketing communications accurately represent the medical necessity of products and services.
- Evaluate your compensation arrangements with referring entities, physicians, and telemedicine platforms for potential exposure under the Anti-Kickback Statute, the Eliminating Kickbacks in Recovery Act, and the federal False Claims Act.
- Assess your organization’s vulnerability to individual criminal prosecution and exclusion. DOJ has made clear that it will hold individual executives, physicians, and company owners personally accountable, with sentences measured in decades and forfeiture of personal assets.
How Frier Levitt Can Help
The Kochen and Herek sentencing is a stark reminder that the government views the telemarketing, telehealth, DME, and kickback nexus as a scheme category that causes direct harm to beneficiaries and to the integrity of federal health care programs. Organizations operating in this space should not wait for a subpoena or an OIG inquiry to assess their compliance posture.
Frier Levitt regularly advises telehealth companies, DME suppliers, pharmacies, marketing organizations, and other health care stakeholders on regulatory compliance, fraud and abuse risk, government investigations, and enforcement matters. If you have questions about your business model, marketing practices, referral relationships, or compliance program, contact our team to discuss how we can help mitigate risk before enforcement issues arise.
