The Department of Justice recently released their Year in Review summary of activity by the Healthcare Fraud Unit, detailing enforcements efforts related to some of the more significant telehealth-related fraud claims in 2021. The DOJ’s litigation unit significantly expanded last year to support the Fraud Unit, resulting in material criminal prosecutions and sentences. Since 2019, the Fraud Unit has led five enforcements actions involving over $8 billion in alleged fraud loss related to the exploitation of the use of telehealth.
As reported here previously, the government’s attention has been focused, in particular, on telehealth claims related to durable medical equipment and lab testing. The way the typical fraud scheme works is as follows. A telehealth marketer contacts a Medicare beneficiary and offers free or low-cost medical products or testing. The result of this “encounter” is sent to a telehealth physician who orders the products or testing, often without any direct interaction with the patient. A telehealth company accepts the order and either directly or indirectly sells the prescription to a lab or medical equipment company. The lab or medical equipment company then bills Medicare and pays a kickback to the initial telehealth marketer or company. Sometimes proceeds from these fraud schemes are alleged to have been laundered through shell corporations and foreign banks.
In one investigation involving claims of a telehealth billing fraud scheme for allegedly medically unnecessary lab testing, the DOJ accused a lab owner of exploiting the temporary waivers of telehealth restrictions enacted during the Covid-19 pandemic. Like the example above, the lab owner was accused of offering telehealth providers access to Medicare beneficiaries for whom they billed telehealth consultations that allegedly never occurred. So far, one of the defendants has pled guilty and was sentenced to 82 months’ imprisonment. The trial is pending.
In the first trial following a 2019 telehealth fraud investigation, a federal jury in July 2021 convicted two owners of DME companies for an illegal telehealth-related kickback and money laundering conspiracy. Here, the defendants were convicted of paying illegal bribes and kickbacks to a call center in the Philippines, which then provided signed doctors’ orders for orthotic braces that were billed to Medicare. Each defendant was sentenced to 168 months in prison.
Another enforcement effort resulting in a criminal conviction in 2021 involved a telemarketing scheme in which the defendant called Medicare beneficiaries and told them (falsely) that Medicare-covered expensive cancer screening genetic testing. After the beneficiaries agreed to take the test, the defendant paid bribes and kickbacks to telehealth companies to obtain physician’s orders authorizing the tests. However, the physicians had little to no contact with the patient. The genetic tests and doctors’ orders were then sold to labs for more kickbacks. The defendant attempted to conceal his actions by submitting invoices to the labs for “marketing services.” However, a jury disagreed and found the defendant guilty. He was sentenced to 120 months in prison.
Avoiding liability for fraud and abuse related to telehealth care is similar to in-person treatment. Providers must determine whether a telehealth visit is appropriate for any given patient. When a physician has an established relationship with a patient, telehealth confirmation or renewal of orders for equipment such as braces or other orthopedic devices might be perfectly appropriate. If a physical examination is warranted, providers are cautioned not to use telehealth as a shortcut to diagnosis or treatment. Further, when signing orders presented by a third party, providers must still review the patient’s information and not simply rely on a third party’s representation that the patient needs a particular type of treatment or device.
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About the Author:
Kimberly Ruppel is Chair of Dickinson Wright PLLC’s Telehealth Task Force in the firm’s Troy, Michigan office. She can be reached at 248-433-7291 or kruppel@dickinsonwright.com and her firm bio can be found here.
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