Feds Charge 24 In Alleged $1.2 Billion Medicare Fraud Scheme

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Federal prosecutors on Tuesday said they dismantled one of the largest health care fraud schemes ever investigated by the FBI, charging 24 people in a $1.2 billion alleged scam involving telemedicine and durable medical equipment companies.

As part of the complex operation, doctors got kickbacks for prescribing unneeded back, shoulder, wrist and knee braces to elderly and disabled patients and charging the government's Medicare program, the Department of Justice said.

The accused "concocted an elaborate scheme to exploit the U.S. health care system by targeting Medicare beneficiaries, paying doctors for prescriptions, paying kickbacks and bribes, and in turn selling these prescriptions to DME companies to ensure that they could line their pockets," IRS special agent Matthew Line said, according to Tut Underwood of South Carolina Public Radio.

Prosecutors allege a multilayered scheme to defraud Medicare. Call centers in the Philippines and Latin America advertised to Medicare beneficiaries and "up-sold" them on unnecessary medical braces, they say.

The call centers then paid bribes to telemedicine companies, who in turn paid doctors to write orders for the equipment. Then the call centers sold the orders to the durable medical equipment companies and billed Medicare.

Equipment companies would ship the braces to beneficiaries. They would receive about $500 to $900 per brace from Medicare and paid kickbacks of almost $300 per brace, according to the Associated Press.

Doctors wrote prescriptions for medical equipment without any interaction with patients or after only a brief phone conversation, the DOJ said.

People participating in the alleged scheme laundered money through shell companies and used proceeds to buy "exotic automobiles, yachts and luxury real estate in the United States and abroad."

CEOs, COOs and associates with five telemedicine companies; owners of durable medical equipment companies; and three licensed medical professionals were among the 24 people charged.

Prosecutors charged residents of several states, including Florida, New Jersey, Texas, North Carolina, South Carolina, California and New York.

The government Center for Medicare Services' anti-fraud branch said it took "adverse administrative action" against 130 medical equipment companies that had billed Medicare more than $1.7 billion in claims and were paid more than $900 million.

The IRS chief of criminal investigation, Don Fort, said in a statement that the organized scheme "details broad corruption, massive amounts of greed, and systemic flaws in our healthcare system that were exploited by the defendants."

The FBI, IRS and 17 U.S. attorneys' offices took part in the operation, according to AP.</s>In one of the largest Medicare fraud busts in U.S. history more than $1.2 billion in taxes was wasted, and it’s a scheme that CBS 2 Investigator Pam Zekman first exposed last fall.

The U.S. Department of Justice announced action Tuesday against 24 people involved with five telemedicine companies and 130 medical equipment companies for billing Medicare for the more than $1.2 billion in unnecessary medical equipment such as braces, like in the case of Donald, who CBS 2 first interviewed last fall.

Donald received a call telling him he “may qualify for a knee or back brace at little or no cost to you.”

“I rattled off my social security number, and then I realized, ‘Oops, I shouldn’t have done that,'” he said.

Medicare paid $3,236 in taxpayer dollars for five braces that he didn’t need and never ordered.

The feds say offshore call centers contact Medicare patients and get their personal information. They then have a “phone consultation” with a doctor who orders prescriptions for the braces. A medical equipment company fulfils the order and bills Medicare, sending a kickback to the original conspirators.

Mabel Fowler received 10 braces. Medicare paid $4,389 in taxpayer money for the unnecessary braces.

Both Donald’s and Mabel’s cases are now part of the nationwide federal investigation.

“I feel violated,” Donald said. “I have the same feeling I felt when I was robbed once.”

It’s unclear if any of those charged are from Illinois, but the investigation continues.</s>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 two Glendora men who ran medical device companies and doctors accused of writing bogus prescriptions.

The Justice Department said the scheme relied on overseas call centers to pry 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.

The Glendora men, 41-year-old Darin Flashberg and 47-year-old Najib Jabbour, own seven medical equipment companies and are accused of profiting $34 million of a scheme to pay kickbacks and bribes for unnecessary orders, prosecutors said.

Both men were arrested Tuesday morning, the FBI 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 loss to Medicare was 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 FBI, the IRS and 17 U.S. attorney’s offices took part in the crackdown.

“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.”

Attempts to reach defendants named by the Justice Department were unsuccessful. In several cases telephone numbers associated with the individuals were disconnected. Others did not respond to messages.

The investigation is continuing. Authorities asked doctors who have been involved with telemedicine and medical equipment fraud to voluntarily come forward.

Health care fraud is a pervasive problem that costs taxpayers tens of billions of dollars a year. The true extent of it is unknown, and some cases involve gray areas of complex payment policies.

Experts say part of the problem is that Medicare is required to pay medical bills promptly, which means money often goes out before potential frauds get flagged. Investigators call that “pay and chase.”

In recent years, Medicare has tried to adapt techniques used by credit card companies to head off fraud. Law enforcement coordination has grown, with strike forces of federal prosecutors and agents, along with state counterparts, specializing in health care investigations.

Officials said the government has options to recoup at least some of the money lost to Medicare, including seizing fraudsters’ assets and accounts, as well as property purchased with the proceeds of the scam.

The Medicare beneficiaries drawn into the orthopedic braces scam didn’t have to pay anything up front, but Cantrell said they have been harmed as well: A beneficiary’s private information, once in the hands of fraudsters, can be resold for many illegal purposes.

Additionally, if a beneficiary whose information was misused ever does need an orthopedic brace, he or she may encounter waiting periods from Medicare. The program limits how often it pays for certain supplies and equipment.

“It can be very attractive to receive equipment,” Cantrell said. “But after giving out your identifying information, it could be compromised to perpetuate additional fraud. There is no fraud without the ID number of a Medicare beneficiary.”</s>Federal authorities say they've broken up a $1.2 billion Medicare scam that peddled unneeded orthopedic braces to hundreds of thousands of seniors via foreign call centers.

The Justice Department announced charges Tuesday against 24 people across the U.S., including doctors accused of writing bogus prescriptions for unneeded back, shoulder, wrist and knee braces. Others charged included owners of call centers, telemedicine firms and medical equipment companies.

The Health and Human Services inspector general's office said the fast-moving scam morphed into multiple related schemes, fueled by kickbacks among the parties involved. The FBI, the IRS and 17 U.S. attorney's offices took part in the crackdown. Arrests were made Tuesday morning.

"Health care fraud causes billions of dollars in losses, it deprives real patients of the critical health care services they need, and it can endanger the lives of real patients so individuals like those arrested today can profit from their criminal activity," FBI Assistant Director Robert Johnson said in a statement.

Medicare's anti-fraud unit said it's taking action against 130 medical equipment companies implicated. They billed the program a total of $1.7 billion, of which more than $900 million was paid out.

Telemarketers would reach out to seniors offering "free" orthopedic braces, also touted through television and radio ads. Beneficiaries who expressed interest would be patched through to call centers involved in the scheme. Officials described an "international telemarketing network" with call centers in the Philippines and throughout Latin America.

The call centers would verify seniors' Medicare coverage and transfer them to telemedicine companies for consultations with doctors.

"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."

The doctors would write prescriptions for orthopedic braces, regardless of whether the patients needed them or not. In some cases several braces were prescribed for the same patient.

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.

The scam was detected last summer, officials said. Complaints from beneficiaries were pouring in to the Medicare fraud hotline, and some consumer news organizations warned seniors. As the investigation progressed, Cantrell said, federal agents gained cooperation from people familiar with the various schemes.

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.

"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."

Health care fraud is a pervasive problem that costs taxpayers tens of billions of dollars a year. The true extent of it is unknown, and some cases involve gray areas of complex payment policies.

Experts say part of the problem is that Medicare is required to pay medical bills promptly, which means money often goes out before potential frauds get flagged. Investigators call that "pay and chase."

In recent years, Medicare has tried to adapt techniques used by credit card companies to head off fraud. Law enforcement coordination has grown, with strike forces of federal prosecutors and agents, along with state counterparts, specializing in health care investigations.

The Medicare beneficiaries drawn into the orthopedic braces scam didn't have to pay anything up front, but Cantrell said they have been harmed as well: A beneficiary's private information, once in the hands of fraudsters, can be resold for many illegal purposes.

Additionally, if a beneficiary whose information was misused ever does need an orthopedic brace, he or she may encounter waiting periods from Medicare. The program limits how often it pays for certain supplies and equipment.

"It can be very attractive to receive equipment," Cantrell said. "But after giving out your identifying information, it could be compromised to perpetuate additional fraud. There is no fraud without the ID number of a Medicare beneficiary."</s>(Reuters) - U.S. authorities on Tuesday said they have broken up a $1.2 billion Medicare fraud in which doctors, telemarketers and owners of medical equipment companies peddled medically unnecessary orthotic braces to hundreds of thousands of elderly and disabled patients.

Authorities called the case one of the largest health care frauds ever prosecuted in the United States.

Prosecutors accused so-called durable medical equipment (DME) companies of paying kickbacks and bribes in exchange for referrals by doctors working with fraudulent telemedicine companies for back, knee, shoulder and wrist braces that patients did not need.

The scheme allegedly involved the use of call centers in the Philippines and throughout Latin America, with proceeds laundered through offshore shell companies and used to buy exotic cars, yachts and luxury real estate.

Medicare’s anti-fraud unit said it was taking action against 130 medical equipment companies that had submitted more than $1.7 billion of claims, and been paid more than $900 million.

Charges against various defendants were brought in California, Florida, New Jersey, Pennsylvania, South Carolina and Texas.

They were announced in a joint statement from several U.S. attorneys, the FBI, the Department of Health and Human Services’ (HHS) Office of Inspector General and the Internal Revenue Service.

“The breadth of this nationwide conspiracy should be frightening to all who rely on some form of healthcare,” IRS Criminal Investigation Chief Don Fort said in a statement. “It details broad corruption, massive amounts of greed, and systemic flaws in our healthcare system that were exploited.”

Authorities identified the largest alleged individual scheme as a $454 million fraud run by Florida residents Creaghan Harry, Lester Stockett and Elliot Loewenstern, respectively the owner, chief executive and marketing vice president of call centers and telemedicine companies.

That case is being overseen by U.S. Attorney Craig Carpenito in New Jersey.

Carpenito also announced charges against New Jersey residents Neal Williamsky and Nadia Levit, who own approximately 25 DME companies, over their alleged roles in a separate $150 million scheme.

Lawyers for Williamsky and Levit lawyers did not immediately respond to requests for comment. Lawyers for Harry, Loewenstern and Stockett could not immediately be located, and attempts to reach those defendants by phone were unsuccessful.

HHS issued a consumer alert warning Medicare beneficiaries about scammers who might offer braces through television or radio ads, or by calling them directly.(here)

It said Medicare might deny needed braces to beneficiaries who receive unwanted or unneeded braces that are billed to Medicare now.</s>April 9 (Reuters) – U.S. authorities on Tuesday said 24 defendants have been charged in connection with one of the largest health care fraud schemes prosecuted by the federal government, involving telemedicine companies and resulting in more than $1.2 billion of losses.

Authorities said the charges concern an alleged scheme by so-called durable medical equipment companies to pay kickbacks and bribes in exchange for referrals of Medicare beneficiaries for medically unnecessary back, knee, shoulder and wrist braces.

The U.S. Department of Justice said hundreds of thousands of elderly or disabled patients were lured into the scheme to defraud Medicare.

Among the defendants were chief executives and other top officials associated with five telemedicine companies, and the owners of dozens of durable medical equipment companies.</s>COLUMBIA — The owner of several medical equipment companies in Mount Pleasant and other parts of South Carolina was charged Tuesday as part of a federal investigation that zeroed in on nearly $1 billion in alleged Medicare fraud.

Sherri Lydon, U.S. attorney for South Carolina, revealed the alleged scheme that included kickbacks, overseas call centers and prescriptions obtained by doctors via telemedicine.

It also reportedly included millions of dollars in neck, arm and back braces that were billed to Medicare.

Andrew Chmiel, 43, of Mount Pleasant was one of the 24 people charged as part of the months-long criminal investigation playing out in 17 federal courthouses across the country.

More than 80 search warrants were executed as part of what federal prosecutors are calling "Operation Brace Yourself."

The investigation originated in South Carolina but ended up including investigators from the FBI, the Internal Revenue Service, and the Department of Health and Human Resources.

"White-collar crime is not a victimless crime," Lydon said. "Ultimately, it is the taxpayers who will pay for higher health care premiums and out-of-pocket costs that result from fraud on our Medicare system."

Chmiel and other owners of medical equipment companies in the United States are accused of purchasing Medicare patient prescriptions from call centers located overseas and billing federal taxpayers for unnecessary medical services.

The foreign call centers did the work of luring in Medicare patients with advertisements, according to federal prosecutors. Then the call centers allegedly paid kickbacks to telemedicine companies and doctors who prescribed medical braces to patients they never actually examined.

Those ready-made patients were then handed over to people like Chmiel at a price. He allegedly made his money by shipping leg, wrist or neck braces to patients and billing Medicare for the equipment.

Federal prosecutors also allege Chmiel paid kickbacks to the call center. Bart Daniel, Chmiel's attorney, did not immediately return a call seeking comment.

The alleged scheme was a money-maker for Chmiel. According to the indictment, he charged Medicare more than $216 million through his businesses in Mount Pleasant, Greer, Taylors, North Charleston and five other states.

The federal prosecutors are now seeking to claw back money from Chmiel. To do that, they are looking to seize his home in Mount Pleasant and his Ferrari and two Mercedes.

"These individuals were motivated by greed," said Matthew Line, a special agent with the IRS. "These defendants in this case concocted an elaborate scheme to exploit the U.S. health care system."

The goal of the investigation, Lydon said, was to "dismantle every aspect of this fraudulent scheme" from the advertising to the physicians writing prescriptions to the medical equipment companies that billed Medicare.

"This fleecing of America was a massive scheme, which took a coordinated team effort to take down this criminal network," said Jody Norris, a special agent with the FBI.</s>The uncovered scheme went as follows: Medicare customers would be targeted in ads for Medicare premiums. The customer would call a call center in the Phillippines and the victim would be up-sold “free to low-cost durable medical braces” for ailments in knees, necks, and other joints. The call centers paid illegal medical kickbacks and bribes to managers and operators of tele-medical companies and others who participated in exchange for “DME (durable medical equipment) orders for those Medicare beneficaries.”</s>Hundreds of thousands patients were lured into worldwide criminal healthcare fraud schemes involving telemedicine and durable medical equipment (DME) executives, according to the FBI and Department of Justice.

The illegal kickback scheme allegedly involved companies that received money in exchange for referral of Medicare beneficiaries by medical professionals for back, shoulder, wrist and knee braces that are medically unnecessary.

The 24 defendants, among them CEOs associated with five telemedicine companies, the owners of dozens of DME companies and three licensed medical professionals, allegedly participated in healthcare fraud schemes involving more than $1.2 billion in losses.

The criminal scheme, which crossed borders, involving call centers in the Philippines and throughout Latin America, comprised an international telemarketing network that tricked hundreds of thousands of elderly and disabled patients.

According to allegations in court documents, some of the defendants obtained patients for the scheme by using an international call center that “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” DME braces, regardless of medical necessity.

The proceeds were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate in the United States and abroad.

Investigated by the FBI and the U.S. Department of Health and Human Services Office of the Inspector General and prosecuted by the DOJ, the defendants are charged with running a complex, multilayered scheme to defraud the Medicare system and avoid detection by government regulators.

“Healthcare fraud causes billions of dollars in losses, it deprives real patients of the critical health care services they need, and it can endanger the lives of real patients so individuals like those arrested today can profit from their criminal activity,” FBI Assistant Director Robert Johnson said in a statement.

The conspiracy described in the indictment details broad corruption, massive amounts of greed and systemic flaws in the nation’s healthcare system that were exploited by the defendants in multiple states, including South Carolina, Florida and Mississippi.

“This Department of Justice will not tolerate medical professionals and executives who look to line their pockets by cheating our health care programs,” Assistant Attorney General Brian Benczkowski said in a statement.

WHAT ELSE TO KNOW

The Centers for Medicare Services, Center for Program Integrity (CMS/CPI) also announced that it took adverse administrative action against 130 DME companies that had submitted over $1.7 billion in claims and were paid over $900 million.

“The defendants took advantage of unwitting patients who were simply trying to get relief from their health concerns,” U.S. Attorney Craig Carpenito said in a statement. “Instead, the defendants preyed upon their weakened state and pushed millions of dollars’ worth of unnecessary medical devices, which Medicare paid for, and then set up an elaborate system for laundering their ill-gotten proceeds.”

Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.

Nathan Eddy is a healthcare and technology freelancer based in Berlin.</s>U.S. federal agents have smashed a worldwide medical care scheme that defrauded U.S. taxpayers of more than $1 billion.

The Justice Department said Tuesday 24 people have been charged, including doctors, telemarketers and the heads of companies that provide back, wrist and knee braces.

"This Department of Justice will not tolerate medical professionals and executives who look to line their pockets by cheating our health care programs," U.S. Assistant Attorney General Brian Benczkowski said Tuesday.

The extensive and complex scheme stretched from the U.S. to call centers in the Philippines and across Latin America.

Telemarketers would phone patients offering them free medical braces. When call centers verified that the patients were covered by Medicare, they were transferred to telemedicine companies, where doctors -- who never examined the patients -- would prescribe the braces even if there was no medical reason to have one.

The medical equipment companies would bill the government and kickback a portion of the funds to the others in the scam.

The fraud was detected last year when a number of Medicare beneficiaries smelled what sounded like a scam and called a government hotline.

The FBI, Health and Human Services, and Internal Revenue Service investigated.

"The breadth of this nationwide conspiracy should be frightening to all who rely on some form of health care,” IRS investigations chief Don Fort said. "The conspiracy ... details broad corruption, massive amounts of greed and systemic flaws in our health care system that were exploited by the defendants."
The United States federal government charges 24 in a Medicare fraud scheme involving the billing of Medicare for nearly $1.2 billion in unnecessary back braces and other medical braces pitched via telemarketing through durable medical equipment companies.