Federal Enforcement Targeting Illegal Telehealth Schemes Continues Unabated Since the Announcement of Operation Brace Yourself in 2019

On April 9th, 2019, U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) and Department of Justice (DOJ) announced one of the largest health care fraud schemes involving several telemedicine companies, dozens of durable medical equipment (DME) companies and licensed medical professionals, for their alleged participation in health care fraud schemes involving more than $1.2 billion in losses to the Medicare system. Since the April announcement a steady stream of indictments, guilty pleas, arrests and investigations have been announced by the DOJ in telehealth related schemes.

One of the defendants in the original indictment plead guilty in August to conspiracy to violate the anti-kickback statute. According to the plea agreement, the defendant, the owner of a telemedicine company, and his co-conspirators solicited and received illegal kickbacks from durable medical equipment companies, telemarketers, recruiters, and others in exchange for facilitating the production of signed doctors’ orders for DME. The defendant understood that the doctors’ orders would be used to submit claims to Medicare. The defendant was informed that such claims violated applicable law because they were induced by his payments to healthcare providers. The defendant and his co-conspirators then disguised the nature and source of the kickbacks by entering into contracts that falsely identified the payments made to defendant as “marketing” or “business process outsourcing” and by creating false invoices referencing this language.

On September 30, 2020, the DOJ announced a the “Largest Health Care Fraud and Opioid Enforcement Action in Department of Justice History.” The press releases stated that the most significant amount of fraud in the announced case related to schemes involving telemedicine. According to court documents, certain defendant telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary DME, genetic and other diagnostic testing, and pain medications either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen. Durable medical equipment companies, genetic testing laboratories, and pharmacies then purchased those orders—resulting in illegal kickbacks and bribes—and submitted false and fraudulent claims to Medicare and other government insurers. 

As recently as October 7, the DOJ announced that more than 40 individuals will face federal charges as a result of their participation in national telehealth schemes. In one such scheme, the DOJ alleges that telemarketing companies lured patients for the purpose of selling their information to durable medical equipment suppliers, pharmacies, and laboratories. Once patient data was obtained, telehealth executives paid physicians or nurses to prescribe unnecessary products to the patients, often without ever communicating with the patient, or only after brief telephone consultation.

It is clear that federal prosecutors, in cooperation with various federal administrative and law enforcement agencies, are aggressively pursuing alleged criminal charges related to telehealth and marketing. The DOJ’s recent announcements incorporate a list of the individuals recently charged in healthcare and telehealth-related fraud prosecutions, including physicians, nurses, owners of medical supply and marketing firms, and even a company’s compliance officer.

Most of these telemedicine schemes pervert telehealth, which remains a valuable modality for the delivery of healthcare, particularly during the COVID-19 pandemic, as patients are often reluctant to travel to healthcare facilities. These schemes frequently involve an “unbroken chain of remuneration” that flows from the recipient of the prescription or DME order, to a marketing company, to a telemedicine company, and ultimately to the prescriber that generates the prescription or DME order. Many arrangements pose a variety of regulatory risks including the corporate practice of medicine, fee splitting, patient inducement and kickbacks.

How Frier Levitt Can Help

Continued government enforcement activity reinforces the necessity for every healthcare marketing or telehealth arrangement to be reviewed by competent healthcare counsel. Telemedicine is a valuable tool in the delivery of healthcare, but business arrangements must be carefully crafted to survive regulatory scrutiny. If you are a physician or healthcare provider that is approached by a telemedicine company, you must be careful that you are not inadvertently participating in an arrangement that violates federal or state law, or otherwise puts your license and livelihood at risk. If your pharmacy, laboratory, or durable medical equipment company receive orders that result from telehealth encounters you must be certain that the overall arrangement is compliant prior to dispensing, processing, or fulfilling an order. The Frier Levitt team has extensive experience both analyzing and crafting compliant arrangements, as well as actively defending providers who have been swept up in questionable transactions. Contact Frier Levitt to speak to an attorney.

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