On Wednesday, July 20, 2022, the United States Department of Justice (DOJ) announced criminal charges against 36 defendants in 13 federal districts across the United States for more than $1.2 billion in alleged fraudulent telemedicine, cardiovascular and cancer genetic testing, and durable medical equipment (DME) schemes. In connection with the enforcement action, the department seized over $8 million in cash, luxury vehicles and other fraud proceeds. Notably, these charges include some of the first prosecutions in the nation related to fraudulent cardiovascular genetic testing, and we anticipate significant additional enforcement activity in this and related spaces.

This enforcement action primarily targets a scheme 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 telemedicine and digital medical technology companies. More specifically, the government has alleged that telemedicine physicians were ordering expensive and medically unnecessary cardiovascular and cancer genetic tests and durable medical equipment, without having interacted with patients or after merely engaging in a brief phone call. The large volume of tests that were ordered are not approved by Medicare as a general screening test for indicating an increased risk of developing cardiovascular conditions in the future nor are they employed as a method of diagnosing present cardiovascular conditions. Therefore, the government contends that these physicians were ordering tests and equipment that were not utilized to actually treat their patients, but instead were used to submit over $174 million in false and fraudulent claims to Medicare. At that point, the laboratory operators who processed and received hefty reimbursement from the government for the fraudulently ordered tests would allegedly pay kickbacks to its marketers who would in turn pay a portion to the telemedicine companies and call centers who referred the patients to begin with.

Some of the defendants charged in this enforcement action controlled a telemarketing network based both domestically and overseas, that allegedly lured thousands of elderly and/or disabled patients into their criminal scheme. The owners of marketing organizations allegedly had telemarketers use deceptive techniques to induce Medicare beneficiaries to agree to cardiovascular genetic testing, and other genetic testing and equipment, although it was not medically necessary. Along with the criminal charges discussed above, the Centers for Medicare & Medicaid Services (CMS), Center for Program Integrity (CPI) announced that it took adverse administrative actions against 52 providers involved in similar schemes.

In light of the above, it is crucially important for medical professionals to assure that their practice and its personnel are well-informed regarding the concept of medical necessity and to also make sure all business practices are in compliance with state and federal kickback laws. If you have questions or concerns about this new enforcement effort, which is likely a precursor to continued significant enforcement activity, please contact the attorneys at Nicholson & Eastin, LLP.