The U.S. Department of Justice (DOJ) has announced multiple indictments and law enforcement actions related to one of the nation’s largest healthcare fraud schemes.

The announcement came Tuesday, April 9, and stems from an investigation that resulted in charges against 24 defendants, including the CEOs, COOs and others associated with five telemedicine companies, as well as owners of dozens of durable medical equipment (DME) companies and three licensed medical professionals, for their alleged participation in healthcare fraud schemes involving more than $1.2 billion in loss. 

In addition, the Centers for Medicare & Medicaid Services (CMS), Center for Program Integrity (CMS/CPI) announced that it took action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million. 

The charges target an alleged scheme involving the payment of illegal kickbacks and bribes by DME companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist, and knee braces that are medically unnecessary, according to a DOJ news release. The defendants allegedly paid doctors to prescribe DME either without patient interaction or with a brief telephonic conversation with patients they had never met or seen. According to allegations in court documents, some of the defendants obtained patients for the scheme by using an international call center that advertised to Medicare beneficiaries and “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” DME braces, regardless of medical necessity. The international call center allegedly paid illegal kickbacks and bribes to telemedicine companies to obtain DME orders for these Medicare beneficiaries.

Cathy Carter, executive director for the American Board for Certification in Orthotics, Prosthetics and Pedorthics, (ABC) said, “The entire profession should be encouraged by the actions taken by the Department of Justice and CMS to address the fraudulent provision of orthoses through this criminal scheme.” 

Larry D. Word, CPO, FAAOP, ABC president, said, “ABC strongly supports the actions of CMS and the Justice Department in addressing fraud, waste and abuse in the DMEPOS benefit.”

The American Orthotic and Prosthetic Association (AOPA) released a statement on March 28 that criticized the use of lead generation marketing to deliver orthotic devices to patients covered by Medicare or other insurances. AOPA says it is encouraged by both the DOJ indictments and the administrative action taken by CMS. AOPA also says it is hopeful that this sweeping action will drive this criminally negligent activity out of the orthotic and prosthetic marketplace.