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DOJ Focuses on Health Care Fraud Schemes Involving Telemedicine & Health Care Facilities

White Collar Crime and Internal Investigations Alert Luke Cass, Hector J. Diaz, David M. Blank, Christopher J. Frisina

Telemedicine, online medical care concept. Doctor GP with a stethoscope on a laptop screen, office desk background

On September 30, 2020, the Department of Justice (“DOJ”) announced the largest-to-date healthcare fraud takedown, resulting in criminal charges against more than 300 individuals. The charges include more than $6 billion in alleged fraudulent charges and millions of opioid prescriptions. They also include more than $4.5 billion of alleged fraud involving telemedicine. Telemedicine is a vital tool during the COVID-19 Pandemic, but it is also, unfortunately, one being exploited by criminals. Other charges involved abuses at health care facilities and addiction treatment centers.

The takedown was a coordinated effort by the DOJ’s Health Care Fraud Strike Force, the Federal Bureau of Investigation (“FBI”), the U.S. Department of Health and Human Services Office of the Inspector General (“HHS-OIG”), the Drug Enforcement Administration (“DEA”), and involved more than 40 U.S. Attorney Offices across the nation.

In announcing this takedown, the Acting Assistant Attorney General of the DOJ’s Criminal Division heralded the department’s use of data analytics to quickly apprehend individuals involved in the schemes, stating that “[m]any of these prosecutions are the direct result of our use of data analytics.”

The Takedown

The schemes employed by the more than 300 defendants, who include more than 100 licensed medical professions (including more than 50 doctors and 20 executives), were a mixture of classic healthcare fraud schemes and novel ones new to investigators. The familiar schemes included billing federal health care programs for services and products never provided to beneficiaries as well as prescribing or billing for medically unnecessary services or prescriptions, including opioids.

The more novel schemes involved telemedicine – the use of telephones or computers to provide healthcare services remotely. Near the beginning of the pandemic, healthcare experts feared that the increased use of telemedicine would lead to rampant fraud, waste, and abuse given enormous Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) funding. The DOJ’s latest takedown proves that those early fears were well-founded.

Some examples of the fraudulent schemes in the DOJ’s takedown include:

  • New Jersey: A group fraudulently billed Medicare for more than $552 million in genetic testing affecting all fifty states, the District of Columbia, and the Virgin Islands.
  • Illinois: A doctor, alleged to be the largest prescriber of genetic testing in the country, included more than $145 million billed fraudulently.
  • $850 million related to doctors and other providers “who allegedly defrauded insurance providers and their own patients in connection with residential substance abuse treatment centers,” which provide treatment and care to individuals battling addiction. These cases include:
  • Ten individuals in Florida charged in a $91 million scheme involving inpatient and outpatient substance abuse centers.
  • Schemes involving the referral of patients in treatment programs to other health care facilities to receive medically unnecessary tests, medication, and other services.
  • Alabama and Ohio: A scheme involving lab owners and doctors resulted in more than $40 million in fraudulent payments from prescriptions involving more than 27 million doses of opioids.

The Takeaways

Here are four key takeaways from this enforcement action:

  1. This is the largest health care fraud takedown “to-date,” but expect that to be only a temporary designation. The significant federal resources brought to bear by DOJ, HHS-OIG, the DEA and other agencies, coupled with data analytics, is allowing federal enforcement to move faster than ever before in its investigations and prosecutions.
  2. Telemedicine companies should expect greater scrutiny from federal regulators. Telemedicine is a critical tool during the COVID-19 pandemic. It brings health care to those in quarantine and to those who might be homebound, in remote areas, or otherwise unable to visit their health care provider in person. However, for all its benefits, telemedicine is also unfortunately being used as a vehicle for health care fraud schemes. As the Acting Assistant Attorney General for the Criminal Division stated, “telemedicine offers great promise to Americans, especially during this difficult time, and we at the department remain committed to ensuring that that promise is not undermined by fraud and abuse.”
  3. Health care facilities should also expect greater federal scrutiny. Several of the cases in the takedown involved addiction treatment centers, or “sober homes.” In those cases, defendants are alleged to have preyed upon addicted patients, recruiting them from their hometowns where they have support networks, and registering them in facilities in different states where they are placed into these so-called “sober homes.” Once there, patients were provided with drugs that undercut their ability to recover from the addiction and were moved from facility to facility to increase headcounts and maximize billing.
  4. Telemedicine companies and health care facilities can take proactive steps to ferret out bad actors. Compliance policies, training, monitoring, audits, and controls are all invaluable tools to stay one step ahead of fraudsters.

An indictment is merely an accusation. All defendants are presumed innocent unless and until proven guilty. If you have any questions regarding the DOJ’s announcement, these enforcement actions, or any other health care fraud, waste, and abuse concerns, please contact your Quarles & Brady attorney or: