Feds Take Down $1.2 Billion Telemedicine and DME Fraud Scheme

Apr 12, 2019
  • FisherBroyles News
  • Health Care
  • Pharmacy Law

Twenty-four CEOs, COOs, doctors, and others have been charged in a Medicare fraud scheme that cost the federal health care program over $1 billion. Dubbed “Operation Brace Yourself,” the nationwide takedown was led by a task force comprised of members of the FBI, Office of Inspector General – Health and Human Services, (OIG-HHS) along with members of the U.S. Attorneys Office-Criminal Division, and several other federal agencies.

FBI Assistant Director Robert Johnson referred to the telemedicine/DME fraud as “one of the largest health care fraud schemes in U.S. history.”

While the defendants hail from all corners of the United States, including Florida, California, New Jersey and Texas, the common thread in the charges leveled against them is the use of telemedicine, call centers, unethical doctors and dozens of durable medical equipment companies to submit fraudulent claims to Medicare for back, shoulder, wrist and knee braces that were medically unnecessary.

As described in a statement released by the Department of Justice, multiple brace company owners are accused of employing telemarketers (some based in Latin America and the Philippines) to lure elderly, house-bound Medicare patients into “low-cost” programs to obtain various types of braces. The call centers then paid kickbacks to telemedicine companies to obtain durable medical equipment (DME) prescriptions from doctors who were, in turn, paid a kickback to write prescriptions for patients they’d either never seen or treated, or who met the patients only briefly via a single telemedicine consult. The money was then laundered through a number of international shell companies before the defendants spent their ill-gotten gains on Ferraris, yachts and luxury homes.

The numbers are staggering. The following individuals allegedly operated some of the most lucrative schemes:

  • Neal Williamsky, Nadia Levit and Albert Davydov – New Jersey – $150 million
  • Creaghan Harry, Lester Stockett and Elliot Loewenstern – Florida – $454 million
  • Willie McNeal – Florida – $250 million
  • Andrew Chmiel – South Carolina – $200 million

In a statement regarding Operation Brace Yourself, Assistant Attorney General Benczkowski remarked, “These defendants — who range from corporate executives to medical professionals — allegedly participated in an expansive and sophisticated fraud to exploit telemedicine technology meant for patients otherwise unable to access health care. This Department of Justice will not tolerate medical professionals and executives who look to line their pockets by cheating our health care programs.”

Telemedicine is a rapidly evolving area in the provision of healthcare and is particularly attractive to elderly and seriously ill patients that are housebound or have difficulty in accessing onsite care at doctors’ offices and other medical facilities. However, the newness of this type of medical care also presents challenges to those charged with overseeing compliance and enforcement, and, as evidenced by Operation Brace Yourself, presents new opportunities for the commission of fraudulent acts. Given the seriousness of the fraud uncovered in the Operation Brace Yourself investigation, it is easily anticipated that OIG-HHS and other law enforcement agencies will be examining telehealth providers much more closely to ensure compliance and ferret out any potential fraud and abuse.

For questions regarding the subject matter of this alert, please contact any of the FisherBroyles Pharmacy and Health Care Law team.

Brian Dickerson, FisherBroyles Partner
Brian E. Dickerson
[email protected]

Anthony Calamunci, FisherBroyles Partner
Anthony Calamunci
[email protected]

Nicole Waid, FisherBroyles Partner
Nicole Hughes Waid
[email protected]

Amy Butler, FisherBroyles Partner
Amy Butler
[email protected]

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