DOJ Charges 138 across 31 Districts for Various Healthcare Fraud Schemes

Those charged include dozens of licensed medical professionals.

Healthcare fraud, by its nature, clearly tends to resist being narrowly defined.

It was a point driven home by a U.S. Department of Justice (DOJ) announcement this week that 138 defendants widely scattered across 31 federal districts have been criminally charged in connection with various schemes resulting in about $1.4 billion in alleged losses, marking one of the most significant busts of its kind ever.

Those arrested included 42 licensed medical professionals, including doctors, nurses, and others. The charges were connected to approximately $1.1 billion in fraud committed using telemedicine; $160 million connected to other healthcare fraud and illegal opioid distribution schemes; $133 million connected to substance abuse treatment facilities, or “sober homes;” and $29 million in COVID-19 healthcare fraud.

“This nationwide enforcement action demonstrates that the (DOJ) Criminal Division is at the forefront of the fight against healthcare fraud and opioid abuse by prosecuting those who have exploited healthcare benefit programs and their patients for personal gain,” Assistant Attorney General Kenneth A. Polite Jr. said in a statement. “The charges announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of healthcare benefit programs, even amid a continued pandemic.”

As with other recent operations – including an approximately $6 billion bust involving 345 defendants in 51 federal districts last September – the investigation was coordinated by the Health Care Fraud Unit of the Criminal Division’s Fraud Section, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program and its core partners: the U.S. Attorneys’ Offices, U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), FBI, and Drug Enforcement Administration (DEA).

The cases are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, in coordination with 31 U.S. Attorneys’ Offices and agents from HHS-OIG, FBI, DEA, and other federal and state law enforcement agencies.

“Healthcare fraud targets the vulnerable in our communities, our healthcare system, and our basic expectation of competent, available care,” FBI Criminal Investigative Division Assistant Director Calvin Shivers said. “Despite a continued pandemic, the FBI and our law enforcement partners remain dedicated to safeguarding American taxpayers and businesses from the steep cost of healthcare fraud.”

“We have seen all too often criminals who engage in healthcare fraud – stealing from taxpayers while jeopardizing the health of Medicare and Medicaid beneficiaries,” HHS-OIG Deputy Inspector General for Investigations Gary L. Cantrell added. “Today’s announcement should serve as another warning to individuals who may be considering engaging in such illicit activity: our agency and its law enforcement partners remain unrelenting in our commitment to rooting out fraud, holding bad actors accountable, and protecting the millions of beneficiaries who rely on federal healthcare programs.”

According to court documents, the telemedicine charges relate to company executives allegedly paying doctors and nurse practitioners to order unnecessary durable medical equipment (DME), genetic and other diagnostic testing, and pain medications – either without any patient interaction whatsoever, or with only a brief phone call with patients they had never met or seen. DME companies, genetic testing laboratories, and pharmacies then allegedly purchased those orders in exchange for illegal kickbacks and bribes, submitting over $1.1 billion in false and fraudulent claims to Medicare and other government insurers. The proceeds of the scheme were spent on luxury items such as vehicles, yachts, and real estate, officials said.  

The COVID-19-related fraud schemes involved defendants alleged to have exploited policies put in place by the Centers for Medicare & Medicaid Services (CMS) to enable increased access to care during the pandemic, such as expanded telehealth regulations and rules. Defendants “allegedly misused patient information to submit claims to Medicare for unrelated, medically unnecessary, and expensive laboratory tests, including cancer genetic testing,” the press release issued by the DOJ read. This also included criminal charges against five defendants who allegedly engaged in the misuse of Provider Relief Fund (PRF) funding – proceeds were spent on gambling at a Las Vegas casino and paying a luxury car dealership.

Lastly, the sober homes cases were announced on the one-year anniversary of the first-ever national sober homes initiative in 2020, which included charges against more than a dozen criminal defendants in connection with more than $845 million of allegedly false and fraudulent claims for tests and treatments for vulnerable patients seeking treatment for drug and/or alcohol addiction.

Since its creation in March 2007, the Health Care Fraud Strike Force has collectively charged more than 4,600 defendants who have collectively billed the Medicare program for approximately $23 billion.

“Holding to account those responsible for healthcare fraud and diversion of prescription drugs is a priority for DEA,” DEA Administrator Anne Milgram said in a statement. “These fraudulent activities prey on our most vulnerable – those in pain, the substance-addicted, and even the homeless – those who are most susceptible to promises of relief, recovery, or a new start. Not only do these schemes profit from desperation, but they often leave their victims even deeper in addiction. We are grateful to our partners who stand with us to keep our communities safer and healthier through our collective efforts to prevent the misuse and over-prescribing of controlled medications.”

“Every dollar saved is critical to the sustainability of our Medicare programs and meeting the needs of seniors and people with disabilities,” CMS Administrator Chiquita Brooks-LaSure added. “CMS has taken actions against 28 providers on behalf of people with Medicare coverage and to protect the Medicare Trust Fund. Actions like this to combat fraud, waste, and abuse in our federal programs would not be possible without the successful partnership of Centers for Medicare & Medicaid Services, the Department of Justice, and the U.S. Department of Health and Human Services, Office of Inspector General.”