Labs Figure Prominently in Latest DOJ Telemedicine, COVID-19 and Sober Homes Fraud Takedown

Telemedicine was a minor but growing blip on the enforcement radar before the public health emergency. But with the dramatic step up in utilization during the COVID-19 pandemic, it was all but inevitable that schemes involving telemedicine fraud would command more of the DOJ’s attention. So, the agency’s September 17 announcement of its latest nationwide telemedicine crackdown should come as no surprise.

The DOJ Telemedicine Enforcement Actions By the Numbers

Here are some of the key numbers documenting the initiative, which doesn’t yet have a nickname a la last October’s “Operation Rubber Stamp,” the third telemedicine takedown undertaken by the DOJ since 2019:

• 31: The number of federal districts involved in the most recent initiative;
• 138: The number of defendants who’ve been criminally charged, including 42 doctors, nurses and other licensed medical professionals; and
• $1.4 billion: The cost of the alleged losses the government incurred as a result of the different fraud schemes involved.

Of these losses, telemedicine-related schemes accounted for $1.1 billion, including 43 defendants in 11 judicial districts. The rest came from illegal opioid distribution ($160 million), substance abuse treatment facilities, aka, “sober home” ($130 million) and COVID-19 health care fraud ($29 million).

The Telemedicine Fraud Cases

Lab testing figured prominently in the telemedicine schemes. The general pattern: Telemedicine executives allegedly paid doctors and nurse practitioners to order unnecessary genetic and other diagnostic testing (as well as durable medical equipment and pain medications), either with only a brief phone call with patients they had never previously met or seen, or in some cases, no interaction with patients at all. Genetic testing labs then purchased those orders in exchange for bribes and illegal kickbacks. In some instances, medical professionals billed Medicare for sham telemedicine consultations that didn’t take place as described.

The COVID-19 Fraud Cases

In addition to telemedicine abuses, nine defendants were charged in submitting over $29 million in false billing related to the COVID-19 pandemic. In one type of scheme, defendants allegedly exploited CMS’ temporarily liberalized COVID-19 billing and coverage rules, including policies expanding coverage of telemedicine. The DOJ contends that defendants misused patient information to bill Medicare for unrelated, medically unnecessary and expensive lab tests, including cancer genetic testing. Others were charged with misuse of Provider Relief Fund monies.

The Sober Homes Cases

Labs were also caught up in the sober homes cases part of the initiative. According to the DOJ, labs in central California and southern Florida engaged in kickback schemes involving referral of patients to substance abuse treatment facilities, where they’d be on the receiving end of medically unnecessary drug testing, sometimes at the cost of thousands of dollars for a single test.