The Department of Justice indicted four individuals in Tennessee in an alleged scheme involving telemedicine. The Indictment charges conspiracy to commit healthcare fraud, mail fraud, and introducing misbranded drugs into interstate commerce. According to prosecutors, the scheme involved at least $931 million of allegedly false claims.

Telemedicine involves connecting physicians and patients through electronic media. Physicians are contracted by the telemedicine companies and are paid a contracted fee. Patients pay a fee for the service. Typically, telemedicine companies do not submit claims to insurance companies.

The Indictment alleges that HealthRight LLC, a telemedicine company, fraudulently solicited insurance information from patients using its service. Any patients without insurance coverage were screened out. HealthRight LLC further procured prescriptions for pain creams and similar products preselected by defendants’ companies from unknowing doctors. Once the prescriptions were procured, defendants would massively mark up the price of the products, sometimes over 1000%, and bill to insurance companies. The Indictment further alleges that in most instances, the physician did not speak to the patient directly. Instead, physicians received electronic information claiming that the patient had specifically requested the preselected pain creams and other products.

While the Indictment alleges $931 million of allegedly false claims, the forfeiture prayer only seeks $154 million.

The Telemedicine company HealthRight LLC and its CEO pled guilty in September to an unrelated scheme involving fraudulent telemarketing of dietary supplements, skin creams, and testosterone.

Litigation over release of data in the opioid litigation gives a glimpse at the volumes of information available to the Department of Justice in health care fraud cases.

Judge Dan Aaron Polster of the Northern District of Ohio is presiding over a multidistrict litigation involving more than 400 federal lawsuits brought by cities, counties, and Native American tribes against makers of prescription painkillers, companies that distribute the painkillers, and pharmacy chains that sell the painkillers. Judge Polster was picked to preside over the litigation for several reasons, including that Ohio has been hard hit by the opioid crisis and that Judge Polster has extensive experience with multidistrict litigation.

In that litigation, the local governments suing the drug companies sought extensive documentation kept by the United States Drug Enforcement Administration (“DEA”) regarding data on painkiller sales. Status reports filed by the parties revealed that the DEA was worried the release of the information would reveal trade secrets.  The DEA also wanted to limit the amount of information provided and wanted a broad protective order to shield the information from release to the media.  The DEA finally relented and agreed to provide some information.

The New York Times has been covering the story, including outlining what data will be released.  A portion of the NYT article and a link to read more is below.

 

CLEVELAND — The U.S. Department of Justice has shared some federal data about prescription painkiller sales to help with settlement talks between local governments and drug companies targeted in hundreds of lawsuits over the opioid epidemic.

The department previously agreed to release certain data on the grounds it not be circulated publicly and be returned or destroyed when the litigation is finished. The information includes a year-by-year, state-by-state breakdown of companies that made and distributed most of the opioids in each state between 2006 and 2014. It also includes how many pills were sold annually in each state and each drug company’s market share.

DOJ Will Share Rx Painkiller Data For Opioid Lawsuit Talks – WOUB Digital

Interestingly, it seems that the DEA can track sales of opioids to the smallest detail, including state sold, year sold, and even manufacturer.  The DEA’s concerns regarding the trade secret nature of its data gives insight into the value of this information to the Government. In fact, data mining is steering prosecutions, but this data is not only valuable to the Government.  Defense attorneys may find value in this same data when defending health care fraud prosecutions.  Defense attorneys are well served demanding that the Government turn over all documents reflecting data mining resulting in the prosecution of the defendant, including cost reports.

The U.S. Attorney’s Office in Eastern District of New York has unsealed an indictment and arrested three New York diagnostic testing facility owners in alleged multi-million dollar health care fraud scheme. The Indictment alleges a kickback scheme and an unnecessary services scheme. The Department of Justice press release states:

 

According to the indictment, beginning in approximately January 2014 and continuing through at least December 2016, Kaganovich, Mitaishvili and Iskanderova executed a scheme in which they submitted fraudulent claims to Medicare, Medicaid managed care plans and other health care benefit programs for diagnostic testing services.  As part of the scheme, the defendants allegedly paid kickbacks for the referral of beneficiaries who submitted themselves to diagnostic testing and other purported medical services.  The indictment also alleges that the beneficiaries themselves received kickbacks as part of the scheme.  The defendants allegedly submitted and caused to be submitted claims to Medicare, Medicaid managed care plans and other health care benefit programs for services that misrepresented which diagnostic testing company purportedly performed the services.  The indictment further alleges that the defendants disguised their illicit payments by moving the proceeds of this illegal activity through shell companies and engaged in financial transactions greater than $10,000 involving the proceeds of unlawful activity.  Kaganovich and Mitaishviliare are alleged to have falsely reported to the IRS that the illegal payments made to co-conspirators were legitimate business expenses, which caused relevant tax forms to falsely under-report business income and claim deductions.  In addition, the indictment alleges that Iskanderova, on two separate occasions, lied to federal agents about her role in the alleged fraud scheme. Here is the entire story. DOJ Press Release.

 

Given this prosecution, it seems like the Government’s interest in prosecuting diagnostic companies has not waned.