Morris Manning & Martin, LLP

DOJ Takes Aim at Telemedicine with Indictments in $1.2 Billion Medicare Fraud Scheme


A large, recently announced federal investigation could have a substantial impact on the expanding and innovative practice of telemedicine. Companies in this healthcare sector have good reason to take notice.

On April 9, 2019, the Department of Justice (DOJ) unsealed the indictments of 24 individuals, including doctors, marketing staff, and business owners, for Medicare fraud alleging a $1.2 billion telemedicine scheme in which medically unnecessary durable medical equipment (“DME”) was prescribed to Medicare beneficiaries. The DOJ’s press release can be found here. Separate indictments have been issued by grand juries in various United States District Courts in South Carolina, Florida, California, Pennsylvania, New Jersey, and Texas. More indictments and investigations are expected in the future.

As evidence of this coordinated enforcement effort between agencies, the Centers for Medicare and Medicaid Services, Center for Program Integrity (CMS/CPI) also announced that it had taken adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million.

This is the latest in a number of government investigations implicating the practice of telemedicine. Late last year, the DOJ announced a similar investigation involving fictitious telemedicine services and millions of dollars worth of prescription pain creams.

The recently unsealed indictments allege a broad national and international scheme in which telemarketers and telemedicine companies were paid for their patient referrals. Paying for Medicare patient referrals is a clear violation of the federal Anti-Kickback Statute. These prosecutions confirm that the government will always view prohibited referral arrangements, cross-referral arrangements, and other incentives between telemedicine providers and physicians as highly problematic.

The doctors, who also allegedly received kickbacks from the telemedicine companies, are claimed to have signed prescriptions for medically unnecessary back, shoulder, and knee braces after telemedicine consults that never occurred. Medicare ultimately paid for, these services.

In addition to the claimed kickbacks, the telemedicine providers involved allegedly did not comply with applicable Medicare rules governing the practice of telemedicine. Specifically, providers were alleged to have written DME prescriptions without ever examining or even talking to a patient. These practices also run afoul of state laws governing the practice of telemedicine. While telemedicine standards for patient encounters may be one of the more straightforward requirements, there are numerous other requirements relating to licensure, non-covered services, coding, documentation, and informed consent. In Georgia, for example, telemedicine providers must:

  • Have a valid Georgia license if treating patients physically in Georgia;
  • Examine a patient in person by a Georgia-licensed physician, physician’s assistant, or nurse practitioner prior to the telemedicine treatment unless the telemedicine treatment is "equal or superior" to in-person treatment; and
  • Have the patient’s medical history available, plus document and keep valid medical records.

The increased scrutiny on the practice of telemedicine should serve as a reminder to undertake a comprehensive review of federal and state regulations applicable to your practice or business to ensure continued compliance. It is also important to remember that reimbursement rules for telemedicine may even differ among private payors, Medicare, and Medicaid programs.

These prosecutions make clear that telemedicine will continue to be an enforcement focus at a time when telemedicine is expanding and the risk of noncompliance could land a provider at the center of an investigation. For proponents of telemedicine, the hope is that misconduct and enforcement efforts like the one recently announced will not deter the growth and expansion of telemedicine which can have tremendous benefits such as expanding access to health care and reducing hospital admissions.

Another notable takeaway from these recent indictments is the government’s focus on stopping fraud in “real-time” and relying on the federal statutes authorizing asset forfeiture to achieve this goal. Several of the prosecutions include forfeiture of assets and property associated with the alleged offenses. For those accused of wrongdoing, forfeiture is not always considered a “fair fight” because the burden of proof is relaxed for the government. In addition, freezing of assets or civil forfeiture may even precede an indictment or notice of investigation and can result in assets being inaccessible for a long period of time or lost. This is a serious concern to individuals and companies as it can adversely affect their ability to practice or operate their business in the future.

If you have any questions or concerns raised by the instant investigation or its implications, please contact us for assistance.