Is That Lucrative Telemedicine Arrangement Actually a Scam?

“One of the largest health care fraud schemes ever charged” offers a cautionary tale as the U.S. Department of Justice criminally charges dozens of defendants involved in genetic testing telemedicine arrangements.

Medical professional holding many medicine bottles in gloved hands.

In what it described as “one of the largest health care fraud schemes ever charged,” the U.S. Department of Justice (DOJ) announced on September 27, 2019 that it filed criminal charges against 35 defendants associated with dozens of telemedicine companies and cancer genetic testing (CGx) laboratories. The DOJ accuses these defendants of collectively billing Medicare more than $2.1 billion in fraudulent charges. 

According to the DOJ, the charges involve elaborate schemes where telemedicine companies and healthcare practitioners with whom they contracted received kickbacks from clinical laboratories to order medically unnecessary CGx tests for Medicare beneficiaries.

The practitioners ordering the tests allegedly had no pre-existing treatment relationship with the beneficiaries and based their orders for the CGx tests primarily on information provided by telemarketing companies, often without even speaking to the patients. In some cases, the labs never provided the tests results to the patients or the results were “worthless” to patients’ treating providers.

The DOJ did not limit its charges to only the operators of the labs that billed Medicare for the CGx tests. Other defendants include owners of the telemedicine companies that arranged for the ordering of the CGx tests, marketers who provided Medicare beneficiary information to the telemedicine companies and ordering practitioners, and individual physicians and other healthcare practitioners. The charges against the defendants include counts of conspiracy to commit healthcare fraud and to pay and receive kickbacks, and substantive counts of healthcare fraud and receiving kickbacks.

CGx Charges Are the Latest in Other Multibillion-Dollar Telemedicine Criminal Charges

Notably, the DOJ’s charges in the CGx cases parallel charges that it filed earlier this year against dozens of defendants across the United States in what it then described as “one of the largest health care fraud schemes” investigated by the Federal Bureau of Investigation (FBI) and U.S. Department of Health and Human Services Office of the Inspector General (OIG) and prosecuted by the DOJ.

In the cases from earlier this year, the DOJ claimed that durable medical equipment (DME) companies, telemedicine companies, and healthcare practitioners contracted with the telemedicine companies perpetuated a $1.2 billion scheme involving the payment of kickbacks and bribes for orders of medically unnecessary back, shoulder, wrist, and knee braces paid for by Medicare.

Since the initial DME-related indictments that the DOJ filed in late March and early April, the DOJ in July indicted an anesthesiologist in another similar case in New York. The DOJ accuses the physician of participating in a conspiracy to commit healthcare fraud by ordering and prescribing DME and prescription drugs in connection with purported telemedicine services that “were not medically necessary and that were induced by kickbacks, and provided for beneficiaries whom [the physician] and others had not examined and evaluated.” 

As in the CGx cases, the DOJ alleges in the DME cases that DME suppliers paid kickbacks and bribes to telemedicine companies and healthcare practitioners to order orthotic braces “either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen.” The DOJ’s indictments describe an elaborate international telemarketing network, which included call centers in the Philippines and throughout Latin America, that some of the defendants used to obtain information from Medicare beneficiaries. With the information from those telemarketers and using online platforms provided by the telemedicine companies, the healthcare practitioners allegedly issued orders for orthotic braces, regardless of medical necessity, which the DME suppliers acquired to support their charges to Medicare.

The DME cases are further similar to the CGx cases in that the DOJ indicted a variety of actors involved in the alleged schemes, including the owners of the DME companies and telemedicine companies, as well as individual physicians. The indictments in the DME cases also assert charges of conspiracy to commit health care fraud and to pay and receive kickbacks, and substantive counts of healthcare fraud and receiving kickbacks.

In tandem with the DOJ’s prosecutions in both the CGx and DME cases, the Center for Program Integrity within the Centers for Medicare & Medicaid Services (CMS) announced that it took adverse administrative action against CGx testing labs and DME suppliers, and the healthcare practitioners who ordered their products. In earlier guidance that CMS issued in late 2018 on “Orders From Telemarketers and Telemedicine Companies,” the agency warned that Medicare regulations prohibit DME suppliers or telemarketers with which they contract from making unsolicited phone calls to Medicare beneficiaries regarding DME covered by Medicare. Failure to comply with these regulations, as CMS noted in the guidance, may result in exclusion from Medicare and other criminal, civil, or administrative penalties for filing a false claim.

What Are the Risks to Healthcare Practitioners Involved in These Telemedicine Arrangements?

The linchpin in both the CGx and DME cases are the healthcare practitioners who ordered the respective CGx tests and orthotic braces. Without the orders they issued, the allegedly fraudulent schemes would lack the necessary underpinning to submit any charges to Medicare.

By indicting individual physicians and other healthcare practitioners, the DOJ has signaled that these practitioners should bear direct culpability for their involvement in these cases. Yet, the DOJ also appears to believe that the ordering practitioners in these arrangements may be critical to uncovering the larger network of actors who are facilitating the alleged fraud. In its press release regarding the DME indictments, the DOJ urged “[a]ny doctors or medical professionals who have been involved with alleged fraudulent telemedicine and DME marketing schemes – including Video Doctor USA, AffordADoc, Web Doctors Plus, Integrated Support Plus and First Care MD – . . . to report this conduct to the FBI hotline at 1-800-CALL-FBI.”

In addition to the FBI hotline, the OIG maintains its own hotline through which a party may make a complaint, either online or by phone, about fraud involving a federal healthcare program. The OIG also operates what is called the Self-Disclosure Protocol, through which healthcare practitioners may voluntarily identify, disclose, and resolve instances of potential healthcare fraud in which they are involved.

Depending on the particular circumstances involved, a healthcare practitioner who has participated in a telemedicine arrangement like those in the pending CGx and DME cases might conclude that reporting through one of these outlets could mitigate the practitioner’s liability in a criminal, civil, or administrative action. Experienced legal counsel can assist a healthcare practitioner in making such a determination.

Filing a Whistleblower Case Under the False Claims Act

While the CGx and DME criminal cases continue to work their way through the courts, it remains to be seen if the cases will prompt any corresponding civil lawsuits. In connection with the criminal cases, the DOJ’s Civil Division might seek civil recoveries from the defendants by filing actions under the False Claims Act (FCA).

The FCA also allows individuals with insight on fraudulent activity involving a federal program, such as Medicare, to file a whistleblower suit – what is called a “qui tam” – on behalf of the federal government. If the whistleblower – or “relator,” in the parlance of the FCA – prevails, the relator may receive a share of the monetary recovery. Even if a party bears some culpability in a fraudulent scheme, the party potentially may still file a qui tam action, though one’s involvement in the scheme might limit the amount of the proceeds that he or she is awarded.

Those who have been involved in telemedicine arrangements like those in the CGx and DME cases, including the healthcare practitioners issuing the orders in those arrangements, potentially may qualify as a relator in a qui tam action.  While pursuing a qui tam is a serious undertaking that any party should assess carefully, in consultation with experienced legal counsel, a qui tam could demonstrate one’s commitment to disclosure and cooperation with the government. In that regard, a qui tam might mitigate a party’s own liability in connection with the potentially fraudulent arrangement.

Contact One of Jackson LLP’s Experienced Healthcare Attorneys Today

If you have participated in or are considering participating in or developing a telemedicine arrangement involving cancer genetic testing or orthotic braces, our healthcare attorneys at Jackson LLP can assist you in evaluating whether the arrangement is legally compliant and analyzing your legal options. To schedule a complimentary phone consultation with one of Jackson LLP’s healthcare attorneys, click the button below.

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