2020 National Health Care Fraud and Opioid Takedown

Case Descriptions

Among the cases charged as part of the 2020 National Health Care Fraud and Opioid Takedown are:

Cases Charged in Health Care Fraud and ARPO Strike Force Locations

In the Appalachian Regional Prescription Opioid (ARPO) Strike Force – North Region, which operates in the Southern District of Ohio, the Eastern District of Kentucky, the Southern District of West Virginia and the Western District of Virginia, 17 defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $3.5 million.  For example, one indictment alleges that a doctor at a pain management practice and his employee unlawfully prescribed significant quantities of opioids, including a fentanyl-based sublingual spray. Further, that doctor was allegedly paid kickbacks from the pharmaceutical company that created the fentanyl spray, and these payments coincided with a massive increase in his fentanyl spray prescribing. These kickbacks were organized through a sales representative for the pharmaceutical company who frequently worked out of the doctor’s office.  This sales representative facilitated the doctor’s prescribing of the fentanyl spray to his patients, and she coordinated the fraudulent scheme that the pharmaceutical company created to pay the doctor. The doctor allegedly caused more than $1.6 million in fraudulent reimbursement from federal and state insurers through his unlawful prescribing of the fentanyl spray.

In the Appalachian Regional Prescription Opioid Strike Force (ARPO) – South Region, which operates in the Eastern, Middle, and Western Districts of Tennessee, and the Northern District of Alabama, eight defendants were charged for their roles in schemes to defraud insurance programs out of more than $41 million, with opioid prescription and diversion offenses, and with tax fraud.  For example, one indictment alleges a $41 million fraud scheme in which a physician and his wife conspired to order medically unnecessary drugs and other services for patients in exchange for kickbacks, including free staff for the medical office and donations to a fraudulent charity set up in the name of the physician’s deceased daughter.

In the Central District of California, six defendants were charged for their roles in schemes to defraud insurance programs of out of more than $48 million.  In one case, a doctor allegedly billed Medicare approximately $20 million between 2013 and 2019 for drainage of tailbone cysts, removal of growths, and injections of drugs intended for the treatment of osteoporosis and osteoarthritis like Boniva, Prolia, and Euflexxa, when, in fact, the doctor is alleged to have never conducted these procedures or provided these injections to beneficiaries.

In the Middle District of Florida, 29 defendants were charged for their roles in schemes to defraud insurance programs out of more than $584 million.  In one case, the CEO of two telemedicine companies pled guilty to soliciting illegal kickbacks and bribes from DME suppliers in exchange for arranging for telemedicine physicians to order durable medical equipment that was medically unnecessary.  The telemedicine company and co-conspirator medical professionals working for the company agreed to order the durable medical equipment without ever speaking to the patients, in order to generate a greater number of orders that could be sold to the co-conspirator DME suppliers and billed to Medicare.  In another case, a DME owner and the manager of a DME company were charged in connection with a scheme that used a telemarketing operation to collect the personal information of Medicare beneficiaries, purchased doctor’s orders for orthotic braces for the beneficiaries under the guise of “telemedicine,” and then submitted more than $25 million in claims to Medicare for medically unnecessary braces. 

In the Southern District of Florida, 34 defendants were charged for their roles in schemes to defraud insurance programs out of more than $1 billion, money laundering offenses, kickback (EKRA and Anti-Kickback Statute) schemes, and other fraud offenses.  For example, the largest addiction treatment fraud case against a doctor ever brought was charged in connection with more than $681 million in false and fraudulent billings for medically unnecessary urine drug tests and blood tests, psychiatric testing, prescription drugs, and other services, which resulted in payments of approximately $121.9 million.  In telemedicine cases, three telemedicine executives and three owners of durable medical equipment companies were charged and pled guilty in connection with more than $175 million in fraud loss.

In the Gulf Coast Strike Force, operating in the Middle, Eastern, and Western Districts of Louisiana, as well as the Southern District of Mississippi, three defendants were charged in connection with health care fraud, kickback, and tax evasion schemes involving more than $135 million in allegedly false and fraudulent claims.  One case alleges that a laboratory owner conspired to pay kickbacks in exchange for genetic testing orders and specimens for the purpose of running medically unnecessary diagnostic testing and submitting false and fraudulent claims to Medicare totaling more than $117 million.

In the Northern District of Illinois, seven defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $205 million.  For example, in one case, a telemedicine doctor who was the top prescriber in the United States for multiple genetic testing billing codes, worked for more than 10 telemedicine companies, and became licensed in 17 total states, allegedly paid five of his friends and relatives to sign telemedicine orders in his name for genetic testing and durable medical equipment that was medically unnecessary.  In total, the scheme allegedly resulted in $145 million in false and fraudulent claims billed to Medicare and approximately $54.6 million paid by Medicare for claims associated with this doctor’s name.

In the Eastern District of Michigan, 14 defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $89 million.  One indictment in a home health “bust out” case alleges an owner of a home health agency billed Medicare for home health services that were never prescribed or provided to Medicare beneficiaries. The home health agency owner billed Medicare for $50 million in just a few months before closing the company.  Funds were then diverted to multiple different shell companies as well as ATM withdrawals.

In the District of New Jersey, 17 defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $1.2 billion.  In one case brought by the Newark and National Rapid Response Strike Forces, three defendants, two owners and operators of three diagnostic testing laboratories, and one marketer, were charged for an alleged health care fraud and kickback (AKS and EKRA) scheme involving a total of approximately $522 million in false and fraudulent claims billed to Medicare, Medicaid, and private insurance companies, of which approximately $84 million was paid for the tests.  The owners of the laboratory are charged with paying kickbacks to a network of marketers to procure DNA samples for genetic testing that they knew to be medically unnecessary and not reimbursable by the health care benefit programs.  As alleged in the indictment, beneficiaries were solicited through methods such as telemarketing, door-to-door sales, and appearances at senior health fairs.  The tests were approved by a range of medical professionals, including doctors operating on telemedicine platforms, who had not previously treated the patients and had little or no contact with them in connection with prescribing the testing.  In another case brought by the U.S. Attorney’s Office for the District of New Jersey, an owner and operator of a telemedicine company was charged and pled guilty for his role in an approximately $414 million health care fraud, wire fraud, and kickback scheme involving the payment of kickbacks and bribes to call centers and health care professionals in exchange for referrals and orders for medically unnecessary genetic cancer screening tests for Medicare beneficiaries.

In the Eastern District of New York, 14 defendants were charged with participating in a variety of schemes involving health care fraud, false statements relating to health care matters, distribution of controlled substances, money laundering, kickbacks, and related charges, which resulted in millions in losses to federal health care programs, including Medicare and Medicaid.  For example, the owner of a Brooklyn physical therapy clinic was charged with conspiracy to commit health care fraud and conspiracy to make false statements stemming from the provision of physical therapy services to beneficiaries that were medically unnecessary, procured by kickbacks, provided by unlicensed practitioners, or otherwise not provided as billed. 

In the Eastern District of Pennsylvania, six defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $27 million.  For example, in one case, a telemedicine company owner and executive was charged and pled guilty to soliciting illegal kickbacks and bribes in exchange for medically unnecessary orders for durable medical equipment and cancer genetic testing, which resulted in more than $20 million in false and fraudulent claims being submitted to Medicare. 

In the Northern District of Texas, 46 defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $58 million and opioid diversion related criminal conduct.  For example, one indictment in a compounding pharmacy fraud case alleges that owners of the pharmacy paid kickbacks to marketers in exchange for prescriptions, regardless of the medical need for the prescriptions.  Once the prescriptions were filled, members of the conspiracy submitted approximately $58 million in false and fraudulent claims to federal health care programs for the compounded drugs.  The pharmacy owners and marketers spent the proceeds of the scheme on luxury vehicles, yacht rentals, and gambling.  In a second case, brought by the U.S. Attorney’s Office for the Northern District of Texas, 40 defendants, including a doctor and pharmacists, were charged for their roles in an alleged conspiracy to possess with intent to distribute and dispense controlled substances.  The defendants operated a network of recruiters who paid homeless individuals to pose as patients in order to obtain prescriptions at clinics, which the recruiters then filled at complicit pharmacies and diverted on the street.  The alleged controlled substances at issue are opioids and prescription medications, including, among others, benzodiazipenes, muscle relaxers, and promethazine with codeine.

In the Eastern District of Texas, in cases brought by the Dallas Strike Force and the U.S. Attorney’s Office for the Eastern District of Texas, a combined total of eight defendants were charged in connection with multiple schemes.  For example, one case involved the operation of a marketing company that allegedly recruited Medicare beneficiaries for medically unnecessary genetic testing that was ordered by telemedicine physicians in exchange for the payment of illegal kickbacks and bribes to telemedicine companies.  In another case, brought by the U.S. Attorney’s Office for the Eastern District of Texas, four defendants were alleged to have conspired to pay and receive kickbacks in exchange for physicians’ orders that were ultimately used to submit claims for payment to federal health care programs.  The conspirators allegedly obtained patient information, including protected health information and personally identifiable information, used the information to create fictitious physicians’ orders, and sold the physicians’ order to each other and to other durable medical equipment providers.  Within approximately eight months, the defendants collectively obtained more than $2.9 million in proceeds from the alleged scheme.

In the Southern District of Texas, 16 defendants were charged for their alleged roles in schemes to defraud insurance programs out of $50 million.  In one case, defendants operating pharmacies and others were alleged to have unlawfully dispensed controlled substances to street gangs that were distributing both methamphetamine and cocaine, in addition to the prescription pills.  337,000 pills of oxycodone and hydrocodone were allegedly involved in this matter.

Jointly Prosecuted Multi-District Cases

The Washington, D.C.-based National Rapid Response Strike Force, in partnership with other Strike Forces and U.S. Attorneys’ Offices, charged 33 defendants who allegedly billed more than $2.2 billion in false and fraudulent claims.  In addition to leading the telemedicine initiative and participating in the sober homes cases included in today’s announcement, National Rapid Response Strike Force prosecutors brought cases in districts across the country, including the prosecution of the largest sober homes case ever charged, the prosecution of one of the largest telemedicine and genetic testing cases ever charged, and the prosecution and guilty pleas by four telemedicine executives in connection with more than $540 million in false and fraudulent billings that resulted from medically unnecessary orders that the telemedicine executives arranged to have signed by medical professionals working for their telemedicine companies. 

In cases that were jointly prosecuted by the National Rapid Response Strike Force, the Market Integrity and Major Fraud Unit of DOJ’s Fraud Section, and the U.S. Attorney’s Office for the Northern District of California, two defendants were charged with crimes related to their alleged participation in a scheme to mislead investors and manipulate a biotechnology company’s stock price, and to conspire to commit health care fraud in connection with the submission of false and fraudulent claims for allergy and COVID-19 testing.

In a case that was jointly prosecuted by the Middle District of Florida, Southern District of California, and District of New Jersey, two owners of numerous durable medical equipment companies were charged and agreed to enter guilty pleas in connection with a telemedicine fraud scheme that resulted in the submission of over $871 million in false claims to Medicare.  The defendants paid illegal kickbacks and bribes to marketing organizations and telemedicine companies in exchange for medically unnecessary orders for orthotic braces, which were signed by telemedicine doctors who did not speak with or had only cursory conversations with the patients.  The defendants then used the proceeds of the fraud to purchase real estate, personal luxury items, and fund nightlife events.

In two cases that were jointly prosecuted by the Los Angeles Strike Force and the United States Attorney’s Office for the District of Montana, two medical professionals were charged in connection with an alleged health care fraud scheme involving the submission of more than $18 million in false and fraudulent claims that involved writing medically unnecessary prescriptions for orthotic braces while working for a telemedicine company, in many instances based on either no contact with or only brief telephone calls to patients. 

In a case that was jointly prosecuted by the Eastern District of Tennessee and the Southern District of Florida, a defendant who owned a telemedicine company was charged with a scheme involving an alleged fraud loss of $797,000.

Cases Brought Across the Country by U.S. Attorneys’ Offices

In addition to cases brought in the Strike Force locations and multi-district cases, today’s enforcement actions include cases brought by an additional 42 U.S. Attorney’s Offices.

In the Middle District of Alabama, two defendants were charged in connection with their alleged roles in a diversion scheme, through which they allegedly caused the distribution of over 50,000 opioid doses.

In the Southern District of Alabama, one defendant was charged in connection with their alleged role in a scheme to defraud insurance programs.

In the District of Arizona, one defendant was charged in connection with his alleged role in a COVID-19 related scheme to defraud insurance programs of out of more than $4 million and money laundering.

In the Eastern District of California, one defendant was charged in connection with an alleged scheme to introduce misbranded drugs in interstate commerce and other fraud charges.

In the Southern District of California, 12 individuals were charged in connection with schemes involving telemedicine and other health care fraud schemes, which collectively are alleged to have been responsible for losses of more than $186 million. 

In the District of Colorado, one defendant was charged for his alleged participation in a kickback scheme with a pharmaceutical company.  The defendant, a doctor, was paid approximately $300,000 to deliver more than 100 “speaker programs,” for which he was paid bribes and kickbacks disguised as honoraria to induce him to write prescriptions for a pharmaceutical company’s drug, a sublingual fentanyl spray, for his patients.  The Medicare and Colorado Medicaid programs paid over $4 million for the prescriptions written for this defendant’s patients.

In the District of Columbia, five defendants were charged in connection with their alleged roles in schemes to defraud insurance programs of out of more than $1 million.

In the Southern District of Georgia, 10 individuals were charged for various fraud schemes, including telemedicine, health care fraud, kickbacks and commercial bribery, and opioid diversion, adding to the 26 defendants charged previously in the district for telemedicine fraud crimes as part of prior telemedicine takedowns.  For example, three of the newly charged defendants were medical professionals, who were alleged to have participated in a telemedicine-based scheme, which now collectively totals more than $1.4 billion in fraudulent claims for defendants charged in the Southern District of Georgia alone.  In another example, among the recent defendants charged, a former compliance officer was charged with conspiracy to commit health care fraud for her role as part of a company that connected various parties through an online-based platform where patients’ health information would be uploaded, prescriptions would be signed electronically by medical professionals, and the package of health information with a signed prescription could then be sold to durable medical equipment companies for eventual billing to Medicare and other programs.

In the District of Maryland, three individuals, including a dentist, were charged with allegedly participating in a scheme to defraud Medicaid involving the submission of more than $17 million in false and fraudulent claims.  As detailed in the indictment, the defendants allegedly caused the submission of claims for dental services, including dentures, purportedly provided to beneficiaries recruited through cash kickbacks.

In the District of Massachusetts, eight individuals were charged with participating in a variety of health care fraud schemes, including charges of health care fraud, opioid tampering and diversion, conspiracy to violate the Anti-Kickback Statute, obstruction and witness tampering, conspiracy to defraud the government, international money laundering, and import and FDCA violations.  For example, three individuals agreed to plead guilty to a $109 million Medicare fraud scheme involving fraudulent orthotics claims that were billed to unsuspecting Medicare beneficiaries—some of whom were dead.  Using more than two dozen shell companies, the defendants collected more than $12 million in Medicare payments.  In another case, a registered nurse agreed to plead guilty to tampering with oxycodone prescribed to a hospice patient.  The nurse defendant replaced the stolen oxycodone with a variety of other prescription drugs, depriving the patient of pain relief for more than two months.  In another investigation, a sales distributor and physician were each charged by Information with conspiring with a medical device manufacturer to accept kickbacks in exchange for using the company’s spinal implants, as well as obstruction and witness tampering.  Finally, the district charged in another case a psychiatrist and his wife who operated two psycho-pharmacology clinics for illegally importing non-FDA approved pharmaceutical drugs designed to curb the cravings of drug and alcohol addiction.  The physician implanted the non-FDA drugs into dozens of drug-addicted patients, many of whom allegedly experienced adverse effects as a result of his substandard procedures.  They were charged with conspiracy to commit promotional international money laundering, and the physician was also charged with conspiracy to defraud, international money laundering, importing merchandise contrary to law, and receipt and delivery of a misbranded drug with intent to defraud.

In the Western District of Michigan, five individuals have been charged with participating in a variety of schemes including drug diversion and billing fraud involving more than $2 million in alleged fraud loss.  Most recently, charges were unsealed alleging that a telemedicine physician falsified records related to the prescribing of more than $500,000 in medically unnecessary durable medical equipment.

In the Eastern District of Missouri, 15 defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $50 million.

In the Western District of Missouri, one defendant was charged in connection with a drug diversion scheme.  Namely, a registered nurse was charged with and pleaded guilty to obtaining fentanyl by fraud for the ordering and diverting of approximately 50 milliliters of fentanyl from a terminally ill patient at a Kansas City medical center.

In the Eastern District of North Carolina, six defendants were charged with participating in a variety of schemes, including billing Medicare and Medicaid for fictitious home health, behavioral health, and telehealth services.  Total fraudulent billings from these schemes alone allegedly exceeded $18 million.  For example, in one case, a licensed clinical social worker at a telehealth provider of mental health services pled guilty to conspiring with others to use 73 patient names to bill Medicare for fictitious services over the course of two years.

In the District of Nevada, three defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $30 million.  In one case, a licensed doctor was charged in an indictment with unlawfully distributing opioids to his patients.

In the Southern District of New York, five defendants – including a medical doctor, a nurse practitioner, and a licensed pharmacist – were charged for their participation in separate health care fraud and opioid diversion schemes that collectively resulted in the alleged diversion of over 650,000 oxycodone pills and other opioids.  The Southern District of New York also entered into a $678 million settlement of a civil fraud lawsuit against Novartis Pharmaceuticals Corp.

In the Middle District of Pennsylvania, one defendant was charged in connection with the takedown in an opioid diversion scheme.

In the Eastern District of Oklahoma, one defendant was charged in connection with the takedown, specifically, a doctor alleged to have unlawfully prescribed opioids to his patients.

In the Western District of Oklahoma, one defendant was charged in connection with the takedown, specifically, a doctor alleged to have unlawfully prescribed opioids.

In the Northern District of Ohio, ten individuals were charged with crimes including conspiracy, mail fraud, wire fraud, aggravated identity theft, conspiracy to defraud the United States, failure to maintain adequate records, and health care fraud.  In one of the cases, the defendants are alleged to have participated in a scheme to defraud eight pharmaceutical companies and the U.S. Food and Drug Administration.

In the District of Puerto Rico, two defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $699,000.

In the District of South Carolina, four individuals were charged in a telemedicine-based health care fraud and kickback conspiracy, involving more than $86 million dollars in false and fraudulent billings.  The individuals were all medical providers, including doctors, who signed prescriptions over a web-based platform, often times without meeting or speaking with the patients.  Additionally, charges were filed against ten individuals and one corporation related to a health fraud and kickback conspiracy that allegedly used offshore call centers and telemedicine to fraudulently bill hundreds of millions of dollars for durable medical equipment that was not medically necessary.

In the District of South Dakota, one defendant, a paramedic, was charged with unlawfully stealing, and obtaining through fraud, fentanyl, morphine, and hydromorphone from an ambulance company.

In the Middle District of Tennessee, one defendant, the owner of a marketing organization, was charged with allegedly paying illegal kickbacks and bribes to telemedicine companies in order to obtain signed doctors’ orders for medically unnecessary cancer genetic testing for Medicare beneficiaries.  The defendant allegedly then solicited illegal kickbacks and bribes from laboratories in exchange for the orders, which the laboratories used to submit false and fraudulent claims to Medicare. 

In the Western District of Texas, three individuals were charged with allegedly participating in a variety of schemes including paying and receiving illegal kickbacks for home health services, the illegal dispensing of prescription medication, and the theft of controlled substances.  Together these matters involved more than $600,000 in alleged fraud loss.  Civil complaints were also filed against an additional four defendants alleging violations of the False Claims Act and Controlled Substances Act.

In the District of Utah, an individual was charged with obstructing efforts on the part of the Department of Justice, United States Department of Health and Human Services, and the Centers for Medicare and Medicaid Services to collect millions of dollars of overpayments from Medicare and Medicaid for alleged fraudulently submitted hospice claims.

In the Eastern District of Virginia, six defendants were charged in connection with the takedown, collectively responsible for an alleged $900,000 in fraud loss.

In the Western District of Wisconsin, a physician was charged with false statements in connection with his work as a telemedicine physician, including for allegedly issuing orders for durable medical equipment that contained false statements that he had spoken with the Medicare beneficiary, that he had established a valid prescriber-patient relationship with the Medicare beneficiary, that he medically assessed the Medicare beneficiary, and that he conducted various examinations and diagnostic tests of the Medicare beneficiary. 

In the Northern District of West Virginia, two defendants, a physician and a registered nurse, were charged in separate schemes involving the illegal distribution of opioids.

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Civil Settlements, Resolutions, and Actions

In addition to the above-described matters, 10 districts involved in this year’s takedown collectively filed or completed more than 20 impactful civil settlements, resolutions, and actions in health care matters: the Southern District of California; the District of Connecticut; the Southern District of New York the Eastern District of Pennsylvania; the Middle District of Pennsylvania; the District of Puerto Rico; the Eastern District of Texas; the Northern District of Texas; the Western District of Texas; and the Western District of Virginia.

Updated September 30, 2020

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