36 Charged in Telehealth Fraud Schemes from Heightened OIG and Regulatory Scrutiny

The Office of Inspector General (“OIG”), in tandem with the U.S. Department of Health and Human Services and other law enforcement agencies, participated (in the 2022 National Health Care Fraud Enforcement Action (the “Action”) to combat health care fraud related to telehealth services. The Action resulted in criminal charges against 36 defendants across 13 U.S. federal districts for alleged participation in various health care fraud schemes that exploited telehealth-related technology totaling more than $1.2 billion. Among the defendants charged were telemedicine company executives and owners as well as executives of clinical laboratories, durable medical equipment (“DME”) companies, marketing organizations and individual medical professionals. The Action primarily targeted alleged schemes involving the payment of illegal kickbacks and bribes by laboratory owners and operators in exchange for the referral of patients by medical professionals working with fraudulent telemedicine and digital medical technology companies.  For example, the various alleged fraud schemes included:

  • Telemedicine executives paying medical providers to order unnecessary laboratory testing, including genetic testing, DME, and other medical services when the medical providers ordering such services had no patient interaction or access to the patient’s medical records.
  • An operator of several clinical laboratories allegedly paid over $16 million in kickbacks to marketers who then allegedly paid kickbacks to telemedicine companies and call centers in exchange for doctors’ ordering certain cardiovascular and cancer genetic testing. The results of testing were not used in the treatment of such patients and the orders were the basis for over $174 million in alleged false and fraudulent claims to Medicare. The proceeds were allegedly laundered through a complex network of bank accounts and entities and ultimately used to make personal purchases, including luxury vehicles, a yacht and real estate.
  • Owners of telemarketing organizations allegedly had telemarketers use deceptive techniques to induce Medicare beneficiaries to agree to cardiovascular genetic testing and other genetic testing and equipment.

A common element of the schemes was telemedicine companies using kickbacks to aggressively recruit and reward practitioners to further perpetuate the fraud schemes. In addition, telemedicine companies commonly paid practitioners a fee that correlated with the volume of federally reimbursable items or services ordered or prescribed by the practitioners, which in turn incentivized practitioners to order medically unnecessary items or services. The OIG stressed that “these types of volume-based fees not only implicate and potentially violate the Federal anti-kickback statute, but they also may corrupt medical decision-making, drive inappropriate utilization, and result in patient harm.”

The various health care fraud schemes implicate multiple federal laws including the Federal Anti-Kickback Statute, the Criminal Health Care Fraud Statute, and the False Claims Act. Practitioners may be liable for these types of arrangements, including for submitting or causing the submission of claims if they are involved in ordering or prescribing medically unnecessary items or services.

Accordingly, the OIG encourages practitioners to exercise caution and heightened scrutiny when entering into arrangements with telemedicine companies that have one or more of these “suspect” characteristics:

  • The purported patients for whom the practitioner orders or prescribes items or services were identified or recruited by a telemedicine company, telemarketing company, sales agent, recruiter, call center, health fair, and/or through internet, television, or social media advertising for free or low out-of-pocket cost items or services.
  • The practitioner does not have sufficient contact with or information from the purported patient to meaningfully assess the medical necessity of the items or services, including instances in which the practitioner is required to use audio-only technology to facilitate engagement with purported patients.
  • The telemedicine company offers compensation based on the volume of items or services ordered or prescribed, which could potentially be characterized as compensation based on the number of medical records that the practitioner reviewed.
  • The telemedicine company only furnishes items and services to Federal health care program beneficiaries and does not accept insurance from any other payor.
  • The telemedicine company claims to only furnish items and services to individuals who are not Federal health care program beneficiaries but may, in fact, bill Federal health care programs.
  • The telemedicine company only furnishes one product or a single class of products (e.g., DME, genetic testing, or various prescription creams), potentially restricting a practitioner’s treatment options, thus predetermining the course of treatment.
  • The telemedicine company does not expect practitioners to follow up with purported patients nor does it provide practitioners with the information required to follow up with purported patients.
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