Dozens Charged in $1.2B Orthopedic Brace Scheme

In this photo provided by the Department of Health and Human Services, agents take part in arrests Tuesday in Queens, N.Y., as they break up a billion-dollar Medicare scam that peddled unneeded orthopedic braces. (Department of Health and Human Services, Office of Inspector General via AP)

(CN) — Federal prosecutors brought charges Tuesday accusing telemedicine executives and doctors of defrauding the government of $1.2 billion in a sprawling Medicare fraud scheme centered on unneeded orthopedic braces. 

In a case it calls “one of the largest health care fraud schemes investigated,” the Justice Department claims the accused executives and medical professionals would refer their patients to durable medical equipment companies for unnecessary back, shoulder, wrist and knee braces, and those companies returned the favor in the form of bribes and other kickbacks.

“Some of the defendants allegedly controlled an international telemarketing network that lured over hundreds of thousands of elderly and/or disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and throughout Latin America,” the DOJ statement reads.

Of the $1.7 billion in Medicare claims submitted by medical equipment companies, over $900 million was reportedly paid out.

The 24 defendants charged Tuesday – including executives of five telemedicine companies, owners of medical equipment companies and three licensed medical professionals – are allegedly responsible for a total of over $1.2 billion in losses to the federal government.

Prosecutors say some of the money was laundered through international shell corporations and used to buy expensive cars, yachts and luxury real estate in the U.S. and abroad.

“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,” Assistant Attorney General Brian Benczkowski said in a statement.

Defendants were charged in California, Florida, New Jersey, Pennsylvania, South Carolina and Texas. The indictment was not immediately available early Tuesday afternoon.

South Carolina U.S. Attorney Sherri Lydon said “white collar crime is not victimless.”

“All taxpayers will endure the rising cost of health care premiums and out-of-pocket costs as a result of fraud on our Medicare system,” Lydon said in a statement.

The Centers for Medicare & Medicaid Services’ Center for Program Integrity has sanctioned 130 durable medical equipment companies that were collectively paid more than $900 million in the scheme. Millions in assets and cash have been frozen or seized as a result of Tuesday’s indictment, prosecutors said.

More than 80 search warrants were issued across 17 federal districts for this and related investigations into potential health care fraud.  

The Justice Department names five companies — AffordADoc, First Care MD, Integrated Support Plus, Video Doctor USA and Web Doctors Plus — and urges anyone aware of allegedly fraudulent schemes involving those companies to contact the FBI.

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