Feds Charge 24 In Alleged $1.2 Billion Medicare Fraud Scheme

The J. Edgar Hoover Building of the Federal Bureau of Investigation seen on April 3. Prosecutors charged 24 people in an alleged scheme to defraud Medicare
The J. Edgar Hoover Building of the Federal Bureau of Investigation seen on April 3. Prosecutors charged 24 people in an alleged scheme to defraud Medicare
Eric Baradat/AFP/Getty Images

Federal prosecutors said they dismantled one of the largest health care fraud schemes ever investigated by the FBI Tuesday, charging 24 people in a $1.2 billion alleged scam involving telemedicine and durable medical equipment (DME) companies.

As part of the complex operation, doctors got kickbacks for prescribing unneeded back, shoulder, wrist and knee braces to elderly and disabled patients and charging the government's Medicare program, the Department of Justice said.

The accused "concocted an elaborate scheme to exploit the U.S. health care system by targeting Medicare beneficiaries, paying doctors for prescriptions, paying kickbacks and bribes, and in turn selling these prescriptions to DME companies to ensure that they could line their pockets," IRS special agent Matthew Line said, according to Tut Underwood of South Carolina Public Radio.

Prosecutors allege a multilayered scheme to defraud Medicare. Call centers in the Philippines and Latin America advertised to Medicare beneficiaries and "up-sold" them on unnecessary medical braces, they say.

The call centers then paid bribes to telemedicine companies, who in turn paid doctors to write orders for the equipment. Then the call centers sold the DME orders to the DME companies and billed Medicare.

Equipment companies would ship the braces to beneficiaries. They would receive about $500 to $900 per brace from Medicare and paid kickbacks of almost $300 per brace, according to The Associated Press.

Doctors wrote prescriptions for medical equipment without any interaction with patients or after only a brief phone conversation, the DOJ said.

People participating in the alleged scheme laundered money through shell companies and used proceeds to buy "exotic automobiles, yachts and luxury real estate in the United States and abroad."

CEOs and COOs and associates with five telemedicine companies, owners of DME companies, and three licensed medical professionals were among the 24 people charged.

Prosecutors charged residents of several states, including Florida, New Jersey, Texas, North Carolina, South Carolina, California and New York.

The government Center for Medicare Services' anti-fraud branch said it took "adverse administrative action" against 130 medical equipment companies that had billed Medicare more than $1.7 billion in claims and were paid more than $900 million.

The IRS chief of criminal investigation, Don Fort, said in a statement that the organized scheme "details broad corruption, massive amounts of greed, and systemic flaws in our healthcare system that were exploited by the defendants."

The FBI, IRS and 17 U.S. attorneys' offices took part in the operation, according to the AP.

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