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Tough Pill to Swallow: $174 Million Telemedicine Pharmacy Fraud Scheme Results in Criminal Convictions

federal jury recently convicted a pharmacy owner for a fraud scheme that entailed more than $174 million in claims paid by private insurers, Medicare, and TRICARE. As with similar recent cases, the pharmacy owner contracted with a telemarketer to recruit patients. The telemarketer then used their platform as a telemedicine service, with physicians remotely prescribing medicines based solely on the telemarketer’s information. The pharmacy owner then maximized insurance payments by picking and choosing which prescription medications he submitted to Pharmacy Benefit Managers (PBM) for reimbursement. Moreover, according to evidence presented at trial, the medications were typically unnecessary, and patients were deceived into providing their insurance information.

Earlier this year, the Department of Health and Human Services Office of Inspector General (HHS OIG) announced that in its 2020 National Health Care Fraud Takedown, $4.5 billion of the more than $6 billion in alleged fraud losses was due to telemedicine schemes. Telemedicine fraud is ripe for False Claims Act enforcement.

Earlier in 2021, the HHS Principal Deputy Inspector General released a statement where she emphasized that the agency “will continue to vigilantly pursue these ‘telefraud’ schemes and monitor the evolution of scams that may relate to telehealth.” In discussing telemedicine, the Principal Deputy Inspector General recently cautioned that “it is important that new policies and technologies with the potential to improve care and enhance convenience achieve these goals and are not compromised by fraud, abuse, or misuse.” Further, the Office of Inspector General (OIG) noted the importance of the “shared goal: ensuring that telehealth delivers quality, convenient care for patients and is not compromised by fraud.” As the coronavirus pandemic continues, telemedicine continues to offer opportunities for immunocompromised and vulnerable patients to receive care, and as telemedicine’s applications expand, it also offers promise for improved access to care beyond the pandemic. Fraudsters taking advantage of telehealth are poisoning the well for the future of remote medicine.

At a global conference last month, HHS OIG leaders indicated in their remarks that OIG will be keeping an eye on telehealth: “I think it is a good example that, as we expand telehealth, there are likely to be instances of large-scale criminal activity that takes advantage of this. And it’s up to OIG to assess those risks, and inform policymakers and stakeholders of those risks, and then from those policymakers and stakeholders to adjust.”

As recently as last month, the United States Attorney for the Southern District of California announced a national health care fraud enforcement action was focused largely on telemedicine fraud cases defined as the use of telecommunications technology to provide health care services remotely. The DOJ press release reinforced that prosecutors will continue to focus on prosecuting health care fraud schemes involving telemedicine.

While this most recent case in Tennessee centered on fraudulent schemes violating the Food, Drug, and Cosmetic Act, telehealth fraud involving fraudulent claims submitted to government health care programs such as Medicare, Medicaid, and TRICARE, may entail False Claims Act violations. Whistleblowers who report fraud may be entitled to receive 15-25% of the government’s recovery.

As one of the Special Agents on the Tennessee case remarked, “Healthcare fraud is an egregious crime problem that impacts every American.”

© 2022 by Tycko & Zavareei LLPNational Law Review, Volume XI, Number 343
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About this Author

Eva Gunasekera WHistleblower and Government Fraud  Attorney Tycko & Zavareei LLP Law Firm
Partner

FORMER DOJ SENIOR COUNSEL FOR HEALTH CARE FRAUD, NOW REPRESENTING WHISTLEBLOWERS

(202) 973-0900
Renée Brooker Whistleblower Lawyer Tycko & Zavareei Law Firm
Partner

FORMER PROSECUTOR IN SENIOR LEADERSHIP POSITION AT DOJ, RESPONSIBLE FOR BILLIONS OF DOLLARS IN RECOVERIES UNDER WHISTLEBLOWER LAWS, NOW REPRESENTING WHISTLEBLOWERS

(202) 417-3664‬
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