Telemedicine Company CEO and NJ Doctor Plead Guilty to Healthcare Fraud Scheme

Earlier this year, the U.S. Department of Justice (DOJ) indicted 24 telemedicine and medical equipment company executives and physicians for their involvement in an alleged $1.2 billion global healthcare fraud scheme after an investigation by the FBI, OIG, and IRS.

Lester Stockett, owner of Video Doctor USA and CEO of AffordADoc, pleaded guilty to conspiracy to defraud the United States, paying and receiving kickbacks, and money laundering. Joseph DeCorso, a New Jersey physician, pleaded guilty to conspiracy to commit health care fraud. According to the DOJ, Stockett and DeCorso, along with other individuals, conspired to solicit and receive illegal kickbacks from patient recruiters, pharmacies, and brace suppliers by ordering unnecessary orthotic braces for Medicare beneficiaries.

An international telemarketing network allegedly paid illegal kickbacks and bribes to telemedicine companies, which then paid physicians to write orders for unnecessary orthotic braces. Certain physicians, including DeCorso, wrote these brace orders without speaking to the targeted beneficiaries. Other physicians issued orders after short telephone calls with beneficiaries, absent a bona fide physician-patient relationship. The telemarketing network then sold the orders to durable medical equipment companies, which fraudulently submitted claims to Medicare. Stockett and other telemedicine executives allegedly submitted, or caused to be submitted, more than $424 million false or fraudulent claims to Medicare, of which more than $200 million was paid.

Stockett has agreed to pay $200 million, and DeCorso has agreed to pay over $7 million, in restitution to the United States. Both individuals will also forfeit all assets and property traceable to the improper proceeds from the fraudulent scheme.

The DOJ stated it will remain “laser-focused” on uprooting health care fraud schemes, especially those that target the most vulnerable. Telemedicine arrangements must be structured appropriately to avoid improper kickbacks and comply with applicable federal and state laws. Furthermore, these telemedicine providers must ensure that a bona fide provider-patient relationship is established prior to billing for the encounter or ordering any ancillary service. Contact Frier Levitt for guidance and review of your current or proposed telehealth business model.