An image of how telefraud schemes operate.
Image Credit: https://oig.hhs.gov/media/documents/telemed-scheme-print_CkIjtht.pdf
By Christian Ison, JHBL Staff Member
With the ever-growing concern of the COVID-19 outbreak, telemedicine is a very accessible way for people to receive the healthcare they need. Telemedicine is the distribution of health services and information via electronic and telecommunication technologies. On the one hand, this methodology allows patients to receive the care and services they need while maintaining social distancing guidelines to reduce the risk of spreading and contracting the virus. However, on the other hand, there is room for telemedicine to be exploited and blatantly abused for personal financial gain by licensed medical professionals.
In September 2020, The Department of Health and Human Services Office of the Inspector General (“HHS-OIG”), with the assistance of state and federal law enforcement, initiated a healthcare fraud takedown charging 345 defendants in 51 federal districts with health care fraud which resulted in about $6 billion in alleged losses. Of the $6 billion, $4.5 billion was in connection with schemes using telemedicine, where one of the cases included false claims for COVID-19 testing. According to HHS-OIG, these “telefraud” schemes have been increasing since 2016, and the defendants charged of these scams include telemedicine executives, physicians, pharmacists, nurses, and other licensed medical professionals.
These schemes work by having marketing networks luring unsuspecting Medicaid or Medicare individuals with telephone calls, direct mail, internet advertisements, and televisions commercials. Once these marketing networks confirm their victims are Medicaid or Medicare recipients, this information is shared with telemedicine companies for a physician consultation. The telemedicine companies then pay medical practitioners to order unnecessary test kits, medical equipment, and prescriptions and sell these items to pharmacies, labs, or medical equipment companies. Once these companies purchase the equipment or prescriptions, they send them to the patients, and Medicare or Medicaid is then billed for these goods and services. As a result, the telemedicine executives receive a kickback from their schemes and the executives allegedly launder their proceeds through international shell corporations and banks in order to hide their scams.
The worst part of these schemes is that the physicians paid to write prescriptions to these Medicaid/Medicare recipients, have few or no conversations with these patients, never meeting or seeing them in person. More often than not, the equipment and medicine ordered are never received by these patients. Or worse, the equipment is sometimes worthless or unnecessary to the patients, delaying their chances of receiving appropriate treatment for their injuries or illness. These schemes also steal billions of dollars from federal programs, where those funds are better off being used to provide high-quality care through an appropriate channel of telemedicine to help people in need of necessary care.
Luckily, Congress has enacted an anti-kickback statute (“AKS”) in order to promote sound medical practices and deter fraudulent behavior.[1] The AKS is a criminal statute that prohibits the knowing and willful payment of remuneration from inducing or rewarding referrals or generating business involving goods or services payable by Medicare and Medicaid. Congress made sure that “remuneration” can be defined as anything of value including cash. This makes sense because a kickback can happen if a physician makes a referral to a company and in exchange, the company gives the physician an all-inclusive paid vacation. In the cases involved in the September 2020 takedown, most defendants were charged with conducting illegal kickback schemes in order to defraud the federal health care programs. For example, in the case of United States v. Davidson, in the Middle District of Florida, a telemedicine CEO pled guilty to soliciting kickbacks and bribes from durable medical equipment (“DME”) suppliers in exchange for telemedicine physicians ordering the equipment, which was found to be medically unnecessary. The scheme between these parties was to generate orders for the DME companies and then bill Medicare for that equipment. In United States v. Audisho in the Northern District of Illinois, the case involved a telemedicine doctor who allegedly paid his friends and relatives to sign telemedicine orders in his name for genetic testing kits and DME. As a result, the doctor’s scheme resulted in $145 million in false claims billed to Medicare and over $54 million paid by Medicaid for claims under the doctor’s name.
The rise of telefraud is important because it presents an ongoing problem for the federal government and an enormous amount of money due to false claims. Since 2007, the government has charged criminal defendants who have fraudulently billed federal health insurance programs about $19 billion and thirteen years later, the problem doesn’t seem to go away. Telemedicine is more prevalent than ever because of the COVID-19 pandemic. Without more regulation by the federal government, it seems particularly easy for licensed medical professionals to make false claims in order to make a profit during quarantine without even talking to or seeing patients (as was done in the aforementioned cases). Fortunately, in the wake of this year’s health care fraud takedown, the Department of Justice has created a National Rapid Response Strike Force that works to identify multi-district fraud schemes by implementing data analytics. In addition, those who are found making false claims to the federal health insurance programs lose federal funding to their facilities.
Telefraud schemes also have a detrimental effect on Medicaid/Medicare patients and other telemedicine businesses who comply with the law. Patient privacy can easily be compromised and it can be difficult to know who this information is shared with. Patient privacy is important to preserve because it can help promote strong doctor-patient relationships and, in turn, promotes a higher quality of care. Moreover, there is actual patient harm that can result with these schemes involving the ordering of unnecessary tests, equipment, and medicine. For example, some of the cases in the telefraud takedown involved substance abuse facilities and targeted patients with drug addictions. These schemes subjected these patients to unnecessary drug testing, prescribed medically unnecessary controlled medications, and even transferred these patients to other treatment facilities in exchange for more kickbacks. It makes one think that a person trying to battle their addiction means nothing unless a quick buck can be made off of them. With these fraud schemes coming to light, there is also potential harm to telemedicine businesses who genuinely try to assist in providing quality health care because they lose business with other patients after learning that there are deceivers in the telemedicine industry. With so much going on during this pandemic, it is hard for people to detect that they have been misled, especially when putting their trust in telemedicine physicians. Unfortunately, once these patients realize they have been misled, it can sometimes be too late to get the appropriate care they need.
The COVID-19 pandemic has challenged everyone. Unfortunately for many, since it could mean their survival, this virus has caused people to fight for the best medical care possible. In the wake of this problem, there are people who rely on telemedicine to receive treatment without going to the doctor’s office. The health care industry is a complex system and telemedicine provides at least one solution to promote efficient healthcare in the United States and could even prove to be the new trend in the future of medicine. However, telefraud is becoming a trend and there are actual risks that telemedicine can be exploited to deceive the millions of people who rely on federal health insurance. On the bright side, the government has been battling to take down these schemes and are taking the right steps to ensure that telemedicine practices are complying with the law, even in the wake of the COVID-19 pandemic.
[1] A kickback scheme is a form of negotiated bribery in which a party gives a commission in exchange for services rendered. In the September 2020 healthcare fraud takedown, a majority of the cases involved some sort of illegal kickback schemes conducted by telemedicine medical professionals and businesspeople.
Christian Ison is a second-year law student at Suffolk University Law School with an interest in health and business law. Christian currently interns for the Honorable Mary Dacey White at the Brookline District Court and is a member of Suffolk Law’s Asian Pacific American Law Students Association and South Asian Law Students Association.
Disclaimer: The views expressed in this blog are the views of the author alone and do not represent the views of JHBL or Suffolk University Law School.
Sources:
- 42 U.S.C. § 1320a-7b(b)
- https://oig.hhs.gov/compliance/physician-education/01laws.asp
- https://constantinecannon.com/practice/whistleblower/whistleblower-types/healthcare-fraud/anti-kickback-stark/#:~:text=The%20Anti%2DKickback%20Statute%20and%20Stark%20Law%20prohibit%20medical%20providers,entering%20into%20certain%20kinds%20of
- https://www.hg.org/legal-articles/kickbacks-and-fraud-in-our-health-care-system-43547
- https://oig.hhs.gov/newsroom/media-materials/2020takedown/?utm_source=web&utm_medium=web&utm_campaign=2020takedown
- https://www.justice.gov/opa/pr/national-health-care-fraud-and-opioid-takedown-results-charges-against-345-defendants
- https://www.justice.gov/criminal-fraud/hcf-2020-takedown/remarks
- https://www.justice.gov/criminal-fraud/hcf-2020-takedown/case-descriptions