Phone alert at night Defendantsallegedly paid doctors to prescribe durable medicalequipment for patients they had never seen and may not even hadspoken to on the phone. (Photo: Shutterstock)

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Twenty-four individuals, including the CEOs, COOs and othersassociated with five telemedicine companies, the owners of dozensof durable medical equipment (DME) companies and three licensedmedical professionals, were charged by the Department of Justice inhealth care fraud schemes that involved more than $1.2 billion inlosses.

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The Center for Medicare Services, Center for Program Integrity(CMS/CPI) has also announced taking adverse administrative actionagainst 130 DME companies that had submitted more than $1.7 billionin claims and were paid more than $900 million.

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According to the DOJ, the alleged schemeinvolved illegal kickbacks and bribes paid by DME companies as areward for Medicare beneficiary referrals by medical professionalswho worked with fraudulent telemedicine companies for back,shoulder, wrist and knee braces that are medically unnecessary.

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How it allegedly worked: some defendants controlled aninternational telemarketing network that lured over hundreds ofthousands of elderly and/or disabled patients into a criminalscheme that involved call centers in the Philippines and throughoutLatin America. Defendants allegedly paid doctors to prescribe DMEfor patients they had never seen and may not even had spoken to onthe phone, and the proceeds from the scheme allegedly werelaundered via international shell corporations, being spent onexotic automobiles, yachts and luxury real estate in the U.S. andabroad.

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The exploitation of telemedicine technology took advantage of asystem meant for patients who have no other way to access care, andcapitalized on its capabilities through luring in patients thatincluded the elderly and disabled who simply sought a respite frompain. Medicare paid for millions of dollars' worth of devices thatwere not medically necessary for the patients lured into thescheme.

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According to court documents, some defendants contactedpatients via an international call center that advertised toMedicare beneficiaries and “upsold” beneficiaries on multiple “freeor low-cost” DME braces, whether they needed them or not. The callcenter then paid kickbacks and bribes to telemedicine companies toget DME orders for these Medicare beneficiaries, then paid offphysicians to write up the medically unnecessary DME orders. Thenthe call center would sell off the DME orders from the telemedicinecompanies to DME companies, which subsequently submitted fraudulentbills to Medicare.

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Collectively, the DOJ says, the CEOs, COOs, executives, businessowners and medical professionals involved in the conspiracy areaccused of causing over $1 billion in loss.

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Marlene Satter

Marlene Y. Satter has worked in and written about the financial industry for decades.