Earlier this week, the Department of Justice announced that a federal grand jury in New Jersey returned a superseding indictment charging Creaghan Harry, of Florida, for his alleged role in orchestrating an illegal kickback scheme that caused the submission of over $784 million in claims to Medicare. According to the indictment, Harry owned telehealth companies through which he paid physicians to order unnecessary medications and durable medical equipment (“DME”) for patients. Thereafter, it is alleged that Harry and his co-conspirators, including a New Jersey physician and a marketer, solicited kickbacks and bribes from DME suppliers and marketers in exchange for the DME orders.
In a 2019 press release concerning Harry and nearly two dozen other alleged co-conspirators, the Department of Justice described how the scheme relied upon an international network of marketers and call centers that made contact with Medicare beneficiaries.
The recent superseding indictment alleges that Harry further misrepresented his business model to external stakeholders, including potential investors and lawyers. Of note, according to the Department of Justice, Harry falsely represented to third parties that the telehealth companies generated about $10 million per year in revenue from fees paid by patients for the purpose of engaging in a telehealth encounter, when in fact the companies’ revenue was primarily derived from kickbacks and bribes.
Key Takeaways
Fighting alleged telehealth fraud remains a priority for the Department of Justice. Federal prosecutors have closely scrutinized and successfully targeted numerous individuals and entities involved in non-compliant telehealth or telemedicine models, particularly in arrangements that are heavily reliant on marketing activities. The scheme described above has led to the indictment of dozens of defendants over the past two years. The resulting fallout from this one network alone underscores the reach of resulting liability in an impermissibly structured relationship.
At a healthcare industry conference session concerning the government’s enforcement priorities, held on August 10, 2021, representatives of the Department of Health and Human Services Office of the Inspector General (“OIG”) indicated that the agency recoups three dollars per dollar spent, as evaluated and regularly published in OIG’s annual Healthcare Fraud and Abuse Control Program Report. These figures are indicative of the success the OIG has had in aggressively targeting allegedly fraudulent activity and recouping significant sums. During the same conference, the OIG emphasized that tackling telehealth-related fraud is a priority for the agency. As such, healthcare providers, marketers, and healthcare technology companies that are involved in any telehealth model must take care to structure their telehealth models compliantly.
How Frier Levitt Can Help
Stakeholders seeking to become involved in a telehealth model should not assume that the size or perceived success of a business is indicative of its compliance. In a telehealth model, every participant has exposure, including marketers, prescribers, and suppliers or pharmacies, and each stakeholder must conduct reasonable due diligence as to the entirety of the model. Frier Levitt’s team of healthcare attorneys has extensive experience guiding clients in developing and rectifying telehealth and marketing models. If you or your practice are involved in providing telehealth, or your pharmacy, laboratory, or durable medical equipment company receives orders that result from telehealth encounters, contact Frier Levitt for a comprehensive compliance review.
