Justice Department cracks down on $1.2B worth of lab testing, telehealth fraud schemes

Three dozen defendants from telehealth companies, clinical laboratories, medtech makers and more have been charged by the U.S. Department of Justice in connection with fraud schemes the government says illegally drummed up more than $1.2 billion.

The vast majority of those earnings—at least $1 billion—stemmed from telemedicine referrals, the Justice Department said in a Wednesday release. In those cases, medical professionals working with fraudulent telehealth providers and digital medtech companies referred patients to certain lab owners and operators, allegedly in return for kickbacks and bribes.

According to the DOJ, many of those referrals ordered expensive genetic tests for cardiovascular conditions and cancer, despite the fact that the heart-focused tests in particular are not approved by Medicare as a reliable screening tool.

The tests and equipment were often ordered after minimal patient interactions, if any, and sometimes were not even delivered to patients or their healthcare providers, the agency said.

In addition to those healthcare workers and executives from clinical labs and telehealth companies, durable medical equipment companies and marketing organizations were also implicated in the Justice Department’s actions.

One group of defendants, for example, allegedly formed a network of telemarketers dispatched to convince thousands of elderly or disabled Medicare patients to agree to requests for genetic testing and medical equipment.

In another case, more than $16 million in kickbacks flowed through a chain of marketers, telemedicine providers and call centers, all of which the government claims sent patients to a single clinical lab operator in exchange for the money. The resulting lab orders totaled more than $174 million in false Medicare claims, according to the DOJ, which was then used to purchase three real estate properties, a yacht and multiple luxury vehicles. The department is seeking $7 million from that defendant.

Joining the Justice Department were the FBI, the Department of Health and Human Services and the IRS, plus a range of other state and federal law enforcement agencies.

Alongside the Justice Department’s crackdown, the Centers for Medicare and Medicaid Services also took action against a total of 52 healthcare providers allegedly involved in similar fraud schemes of their own. Part of that included the agency’s seizure of cash, vehicles and other proceeds from the schemes totaling more than $8 million.