On Wednesday, April 20, 2022, the U.S. Department of Justice (DOJ) announced, a nationwide coordinated law enforcement action to combat health-care-related COVID-19 fraud. Specifically, the DOJ revealed criminal charges – including health care fraud, illegal kickbacks, money laundering, wire fraud, theft of government property, making false statements, and aggravated identity theft – against 21 defendants in nine federal districts courts.  These cases allege nearly $150 million in COVID-19-related fraudulent billing to federal programs and theft from federally funded pandemic assistance programs.  In connection with the enforcement action, the department seized over $8 million in cash and other fraud proceeds.

This enforcement action targeted individuals including medical professionals, office managers, distributers, pharmacy directors, corporate executives, and owners of laboratories and wellness centers. Notably, owners and operators in the laboratory space were indicted with conspiracy to commit health care fraud, conspiracy to pay and payment of illegal kickbacks and bribes to marketers who obtained specimens and test orders, false statements to Medicare, and money laundering through shell companies.

This announcement builds on the success of the May 2021 COVID-19 Enforcement Action and involves the prosecution of various COVID-19 health care fraud schemes. For example, several cases announced today involve defendants who allegedly offered COVID-19 testing to induce patients to provide their personal identifying information and a saliva or blood sample. The defendants are alleged to have then used the information and samples to submit false and fraudulent claims to Medicare for unrelated, medically unnecessary, and far more expensive tests or services. In one such scheme in the Central District of California, two owners of a clinical laboratory were charged with a health care fraud, kickback, and money laundering scheme that involved the fraudulent billing of over $214 million for laboratory tests, over $125 million of which allegedly involved fraudulent claims during the pandemic for COVID-19 and respiratory pathogen tests. The proceeds of this fraudulent scheme were allegedly laundered through shell corporations in the United States, transferred to foreign countries, and used to purchase real estate and luxury items. In two separate cases in the District of Maryland and the Eastern District of New York, owners of medical clinics allegedly obtained confidential information from patients seeking COVID-19 testing at drive-thru testing sites and then submitted fraudulent claims for lengthy office visits with the patients that did not, in fact, occur.

In another type of COVID-19 health care fraud scheme, the defendants allegedly exploited policies that the Centers for Medicare and Medicaid Services (CMS) put in place to enable increased access to care during the COVID-19 pandemic. For example, in the Southern District of Florida, one medical professional was charged with a health care fraud, wire fraud, and kickback scheme that allegedly involved billing for sham telemedicine encounters that did not occur and agreeing to order unnecessary genetic testing in exchange for access to telehealth patients. Late last year, one defendant previously was sentenced to 82 months in prison in connection with this scheme.

The announcement also included charges against manufacturers and distributors of fake COVID-19 vaccination record cards who, according to the allegations, intentionally sought to obstruct the HHS and Centers for Disease Control and Prevention in their efforts to administer the nationwide vaccination program and provide Americans with accurate proof of vaccination. For example, in the Northern District of California, three additional defendants were charged in a scheme to sell homeoprophylaxis immunizations for COVID-19 and falsify COVID-19 vaccination record cards to make it appear that customers received government-authorized vaccines. One defendant allegedly misused her position as the Director of Pharmacy at a northern California hospital to obtain real lot numbers for the Moderna vaccine that were then used to falsify COVID-19 vaccination record cards. Another defendant pleaded guilty in April 2022. In a separate case in the Western District of Washington, one manufacturer was charged in the multistate distribution of fake COVID-19 vaccination record cards after allegedly telling an undercover federal agent that “until I get caught and go to jail, [expletive] it I’m taking the money, ha! I don’t care.”

This enforcement action is the result of investigative efforts governed by the COVID-19 Fraud Enforcement Task Force, established by the attorney general on May 17, 2021, to utilize the resources of the DOJ in partnership with other governmental agencies to prevent pandemic-related fraud. The assistant attorney general criminal chief stated that this enforcement action “reinforces our commitment to using all available tools to hold accountable medical professionals, corporate executives, and others who have placed greed above care during an unprecedented public health emergency.”

If you have questions or concerns about this new effort to combat COVID-19 fraud, which is likely a precursor to additional signficant enforcement activity, please contact us now.