The CFTC Encourages Whistleblowers to Report Information Involving Commodities Fraud

DOJ’s Latest Enforcement Efforts Result in Dozens Being Charged for $1.2 Billion in Health Care Fraud

When Congress passed the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) in response to the pandemic, most people, including many members of Congress, expected that a certain percentage of the economic relief would be lost due to fraud.  We have all seen news stories about scammers who used fraudulently obtained PPP funds to buy exotic sports cars, yachts and other luxury items. But there is another form of COVID-related fraud that hasn’t received the same amount of media attention because it is more complex and less obvious than a “distressed business owner” sporting a new $30,000 Rolex watch. In fact, you may have been an unknowing participant in such a scam without realizing it.

In July, the Department of Justice announced that it had filed criminal charges against dozens of medical providers, as well as executives and owners of clinical laboratories, durable medical equipment companies, and telemedicine companies for their role in health care scams that amount to more than $1.2 billion. Only nine months earlier, DOJ announced another health care fraud enforcement action that involved over $1.4 billion in losses.

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In both DOJ press releases, telemedicine fraud was cited as the largest source of loss due to fraud. Telemedicine is a generic term for the different ways in which a patient can remotely communicate with their doctor using phone calls, video conferencing, email, and text messaging.  Although it was in existence prior to COVID, the use of telemedicine increased significantly during the pandemic. In addition to allowing a patient to communicate remotely with their doctor, telemedicine can be used, and misused, for other purposes.


Types of Telemedicine Fraud

1. Pharmacy Telemedicine Fraud

In May 2022, two Florida men were sentenced for their involvement in a multimillion dollar telemedicine pharmacy fraud scheme. The two men, together with a third defendant, owned a pharmacy in Florida. They hired a telemarketing company to make unsolicited phone calls to prospective patients to try to sell them prescription medications. The customers provided their insurance information to pay for the drugs, which were selected by the pharmacy owners because they could be submitted for reimbursement at inflated prices. The telemarketing company paid doctors to authorize the prescriptions even though the doctors never communicated with the patients. 

Over a period of less than three years, private insurance companies and government insurance programs, such as Medicaid and TRICARE, paid over $174 million in fraudulent claims.

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One of the defendant pharmacy owners was convicted of conspiracy to commit health care fraud, mail fraud, and the introduction of a misbranded drug into interstate commerce. He was sentenced to 14 years in prison; ordered to pay more than $24.6 million in restitution; and a forfeiture of $2.5 million. The second defendant pharmacy owner was sentenced to 33 months in prison and ordered to pay more than $24.6 million in restitution.  In other related cases, 14 additional defendants pleaded guilty to conspiracy to commit health care fraud. 

2. Durable Medical Equipment Telemedicine Fraud

In April 2022,  a New York-based orthopedic surgeon was charged with allegedly submitting millions of dollars in false and fraudulent claims to Medicare in exchange for kickbacks from telemedicine companies.  According to the government’s indictment, the defendant worked for several different telemedicine companies and was paid for each consultation that he had with a patient.

The defendant allegedly wrote prescriptions and filled out order forms through purported telemedicine services for medical equipment that was not medically necessary. The defendant allegedly submitted claims to Medicare and Medicare Part D plans based only on brief telephone conversations with beneficiaries whom he had never physically examined or evaluated. It is further alleged that the defendant received payments from Medicare in the form of bribes and kickbacks, to the tune of over $4 million dollars. If convicted, the defendant could face a sentence of up to 10 years in prison.

In 2019, the CEO of one of the telemedicine companies named in the surgeon’s indictment pleaded guilty to paying illegal kickbacks to health care providers who ordered medically unnecessary braces for Medicare beneficiaries. As part of the plea agreement, the CEO agreed to pay $200 million in restitution to the United States, as well as forfeiture of assets and property traceable to proceeds of the conspiracy to defraud the United States and conspiracy to commit money laundering.

3. Genetic Testing Telemedicine Fraud

In December 2021, the owner of a telemedicine genetic counseling company pleaded guilty to conspiracy to pay and receive health care kickbacks. For a period of 18 months, the company received kickbacks from marketers in exchange for providing signed doctors’ orders for cancer genomic testing. Genomic testing  is not used to diagnose cancer but to identify whether a person has a heightened risk of developing cancer in the future. The marketers specifically targeted Medicare and Medicaid patients through door-to-door canvassing, at nursing homes, and at events for senior citizens. 

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The marketers obtained a genetic sample through a mouth swab kit and delivered the samples to a lab for genomic testing. The lab paid kickbacks to the marketers and billed Medicare and Medicaid for the tests. All of this was made possible through kickbacks paid by the defendant’s telemedicine company to doctors who signed orders for the genomic testing that were medically unnecessary. The defendant knew that the doctors were not treating the patients for any specific medical problem and that the test results were not used to provide medical care to the patients. The defendant was also aware that the doctors rarely ever contacted the patients for any reason.

In June 2021, the owner of the lab was charged with violating the federal anti-kickback statute. The government alleged that the owner and his co-conspirators billed Medicare and Medicaid for more than $150 million over a five year period.


How Whistleblowers Can Help Prevent Fraud

A common thread that runs through these cases, and many others involving medical fraud, is the targeting of seniors enrolled in Medicare. Fraudsters know that the government has limited resources and can’t possibly audit or investigate every claim submitted for reimbursement by a medical provider.

The government needs whistleblowers who have evidence of fraud to come forward and report misconduct. The False Claims Act incentivizes individuals to do so by offering a percentage of a successful recovery as well as providing protection from employer retaliation. Anyone can be a whistleblower, but experience has shown that those with the highest likelihood of success are in positions where they can observe the fraud and collect evidence to prove it. In the case of health care fraud, it could be:

  • a physician observing another physician who routinely provides medically unnecessary treatment or procedures on Medicare or Medicaid patients; 
  • a billing specialist who submits claims to Medicare or Medicaid where a physician is listed as the treating provider when a physician’s assistant was the only one who rendered billable services; or
  • anyone working in a medical practice who observes a physician receiving compensation or gifts in exchange for referring Medicare or Medicaid patients for drugs, medical supplies, or other health care services.

These are only a few examples of the types of health care fraud that cost U.S. taxpayers billions of dollars every year. If you have evidence of fraud against the government, contact the CFTC Whistleblower attorneys at Young Law Group for a no-obligation, confidential whistlebloswer consultation to learn more.