HHS, FBI and IRS team up with 17 U.S. attorney’s offices to arrest 24 people across the country involved in billion dollar Medicare brace scam
Scheme relied on overseas call centers to access Medicare numbers of victims – Justice Dept
Authorities also announced charges against owners of call centers, telemedicine firms and medical equipment companies that shipped unneeded back, shoulder, wrist and knee braces
Medicare’s anti-fraud unit said it’s taking action against 130 medical equipment companies implicated, who had billed the program a total of $1.7 billion
Proceeds of the scheme laundered through offshore shell companies and then used to buy high-end cars, yachts and luxury homes in US and abroad
Although not all of the billing had been paid out to date, loss to Medicare was estimated at more than $1.2 billion
Charges were being brought against defendants in California, Florida, New Jersey, New York, Pennsylvania, South Carolina and Texas
Scam was detected last summer as complaints from beneficiaries poured in to the Medicare fraud hotline
Telemarketers would reach out to seniors offering ‘free’ orthopedic braces, also touted through television and radio ads – Inspector general’s office said it’s one of the biggest frauds they have seen
Federal agents on Tuesday broke up a billion dollar Medicare scam that peddled unneeded orthopedic braces to hundreds of thousands of seniors. Two dozen people were charged, including doctors accused of writing bogus prescriptions.
The Justice Department said the scheme relied on overseas call centers to obtain Medicare numbers from beneficiaries. Authorities also announced charges against owners of call centers, telemedicine firms and medical equipment companies that shipped unneeded back, shoulder, wrist and knee braces.
Profits from the scheme were laundered through offshore shell companies and then used to buy high-end cars, yachts and luxury homes here and abroad, officials said.
Medicare’s anti-fraud unit said it’s taking action against 130 medical equipment companies implicated. The companies billed the program a total of $1.7 billion, but not all of it was paid out.
The FBI, the IRS and 17 U.S. attorney’s offices took part in the crackdown on the scheme which created a loss to Medicare estimated at more than $1.2 billion.
The Health and Human Services inspector general’s office said the fast-moving scam was fueled by kickbacks among the parties involved.
‘The telemedicine we are talking about is basically a tele-scam,’ said Gary Cantrell, who oversees fraud investigations for the HHS inspector general’s office. ‘We are not talking about the use of advanced technology to provide better access to care.’
Officials said the scam was detected last summer as complaints from beneficiaries poured in to the Medicare fraud hotline.
They said telemarketers would reach out to seniors offering ‘free’ orthopedic braces, also touted through television and radio ads.
Interested beneficiaries would be patched through to call centers, part of what officials described as an ‘international telemarketing network’ with operations in the Philippines and throughout Latin America.
After verifying Medicare coverage, the seniors would be transferred to telemedicine companies for consultations with doctors, who wrote prescriptions for orthopedic braces, regardless of whether the patients needed them or not. Sometimes the same patient would get several braces.
The call centers would collect prescriptions and sell them to medical equipment companies, which would ship the braces to beneficiaries and bill Medicare.
Medical equipment companies would get $500 to $900 per brace from Medicare and would pay kickbacks of nearly $300 per brace.
Officials said it’s one of the biggest frauds the inspector general’s office has seen. Charges were being brought against defendants in California, Florida, New Jersey, Pennsylvania, South Carolina and Texas.
Cantrell said federal agents had gained cooperation from people familiar with the various schemes.
‘The breadth of this nationwide conspiracy should be frightening to all who rely on some form of health care,’ IRS criminal investigations chief Don Fort said in a statement.
‘The conspiracy … details broad corruption, massive amounts of greed and systemic flaws in our health care system that were exploited by the defendants.’
Investigators attempts to reach defendants named by the Justice Department found in several cases that telephone numbers associated with the individuals were disconnected, else had pulled stakes and were unreachable.
The investigation is continuing. Authorities asked doctors who have been involved with telemedicine and medical equipment fraud to voluntarily come forward.