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Historic nationwide investigation, with Texas ties, uncovers more than $6B in healthcare fraud, opioid abuse

The U.S. Department of Justice announced a historic nationwide enforcement takedown Wednesday involving 345 charged defended across 51 federal districts, according to a press release.
The U.S. Department of Justice announced a historic nationwide enforcement takedown Wednesday involving 345 charged defended across 51 federal districts, according to a press release. (KPRC)

HOUSTON – The U.S. Department of Justice announced a historic nationwide enforcement takedown Wednesday involving 345 charged defended across 51 federal districts, according to a press release. The investigation alleges more than 100 doctors, nurses and other licensed medical professionals participated in healthcare fraud and opioid abuse.

Investigators charged the defendants with submitting more than $6 billion in false and fraudulent claims to federal healthcare programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million linked to substance abuse treatment facilities or “sober homes,” and more than $806 million related to other healthcare fraud and illegal opioid distribution schemes across the country.

“This nationwide enforcement operation is historic in both its size and scope, alleging billions of dollars in healthcare fraud across the country,” said Acting Assistant Attorney General Brian C. Rabbitt in a press release. “These cases hold accountable for those medical professionals and others who have exploited healthcare benefit programs and patients for personal gain. The cooperative law enforcement actions announced today send a clear deterrent message and should leave no doubt about the department’s ongoing commitment to ensuring the safety of patients and the integrity of health care benefit programs, even amid a national health emergency.”

Texas fraud-related cases

Investigators filed charges against about 70 defendants in Texas, according to court documents.

Southern District of Texas

A total of 16 defendants were charged for their alleged roles in schemes to defraud insurance programs out of $50 million, according to court documents. In one case, defendants operating pharmacies and others were alleged to have unlawfully dispensed controlled substances to street gangs that were distributing both methamphetamine and cocaine, in addition to the prescription pills. Nearly 337,000 pills of oxycodone and hydrocodone were allegedly involved in this matter. The Southern District includes Houston, Galveston, Victoria, Corpus Christi, Brownsville, McAllen and Laredo.

Northern District of Texas

A total of 46 defendants were charged for their alleged roles in schemes to defraud insurance programs out of more than $58 million and opioid diversion related criminal conduct. In one case, the pharmacy owners and marketers that benefited from the fraud spent the money on luxury vehicles, yacht rentals and gambling. The North District includes Fort Worth, Amarillo, Abilene, Lubbock, San Angelo and Wichita Falls.

Eastern District of Texas

Prosecutors charged eight defendants for their alleged involvement in multiple schemes, officials said. In one case, four people allegedly conspired to pay and receive kickbacks in exchange for fraudulent claims to federal health care programs. Within about eight months, the group obtained more than $2.9 million through the alleged scheme. The Eastern District includes Beaumont, Lufkin, Marshall, Plano, Sherman, Texarkana and Tyler.

By the numbers

The 2020 National Health Care Fraud and Opioid Takedown found:

  • More than 300 defendants charged
  • More than 100 licensed professional charged
  • More than $6 million in the alleged loss
  • More than 30 million in prescribed opioid doses
The U.S. Department of Justice announced a historic nationwide enforcement takedown Wednesday involving 345 charged defended across 51 federal districts, according to a press release.
The U.S. Department of Justice announced a historic nationwide enforcement takedown Wednesday involving 345 charged defended across 51 federal districts, according to a press release. (KPRC)

Fraud in telemedicine

Investigators said the largest amount of alleged health care fraud involves telemedicine, calculating to $4.5 billion in allegedly false and fraudulent claims submitted by more than 86 criminal defendants in 19 judicial districts. Telemedicine allows the use of technology to provide health care services remotely.

“Telemedicine can foster efficient, high-quality care when practiced appropriately and lawfully. Unfortunately, bad actors attempt to abuse telemedicine services and leverage aggressive marketing techniques to mislead beneficiaries about their health care needs and bill the government for illegitimate services,” said Health and Human Services Deputy Inspector General Gary Cantrell. “Unfortunately, audacious schemes such as these are prevalent and often harmful. Therefore, collaboration is critical in our fight against health care fraud. We will continue working with our law enforcement partners to hold accountable those who steal from federal health programs and protect the millions of beneficiaries who rely on them.”

According to court documents, some telemedicine executives allegedly paid doctors and nurse practitioners to order medical equipment, testing and pain medicine, either with or without any patient interactions.

Then medical companies, testing laboratories and pharmacies purchased those orders in “exchange for illegal kickbacks and bribes and submitted false and fraudulent claims to Medicare and other government insurers.”

In addition, the CMS Center for Program Integrity separately announced that it has taken “a record-breaking number of administrative actions related to telemedicine fraud, revoking the Medicare billing privileges of 256 additional medical professionals for their involvement in telemedicine schemes,” according to the release by the DOJ.

Facilitating opioid abuse

Investigators also charged more than 240 defendants who were allegedly involved in the illegal prescription and/or distribution of opioids or committed more traditional healthcare fraud. Those schemes totaled more than $800 million in false and fraudulent claims to Medicare, Medicaid, TRICARE, and private insurance companies for medically unnecessary treatments and often never provided.

Court documents showed that, in many cases, patient recruiters, beneficiaries and other co-conspirators were allegedly paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could then submit fraudulent bills to Medicare. Included in these charges against medical professionals have the distribution of more than 30 million doses of opioids and other prescription narcotics, per the release from the DOJ.

The U.S. Department of Justice announced a historic nationwide enforcement takedown Wednesday involving 345 charged defended across 51 federal districts, according to a press release.
The U.S. Department of Justice announced a historic nationwide enforcement takedown Wednesday involving 345 charged defended across 51 federal districts, according to a press release. (KPRC)

Dismantling illegitimate ‘sober homes’

The “sober homes” investigation charged more than a dozen people in connection to more than $845 million of allegedly false and fraudulent claims for tests and treatments for vulnerable patients seeking treatment for drug and/or alcohol addiction, per the DOJ release. The defendants included physicians, owners and operators of substance abuse treatment facilities and patient recruiters.

These individuals are charged for participating “in schemes involving the payment of illegal kickbacks and bribes for the referral of scores of patients to substance abuse treatment facilities.”

Those patients were subjected to medically unnecessary drug testing – often billing thousands of dollars for a single test – and therapy sessions frequently not provided. This resulted in millions of dollars of false and fraudulent claims being submitted to private insurers, per the release.

Investigators also allegedly found that medical professionals “prescribed medically unnecessary controlled substances and other medications to these patients, sometimes to entice them to stay at the facility.”

These patients were then often discharged and admitted to other treatment facilities or referred to other laboratories and clinics in exchange for more kickbacks.

National Rapid Response Strike Force

The DOJ also announced the formation of the National Rapid Response Strike Force of the Health Cae Fraud Unit for the Criminal Division’s Fraud Section, per the release. The new strike force’s mission will be to investigate and prosecute fraud cases involving major and regional health care providers that operate in multiple jurisdictions and throughout the United States.

The strike force’s efforts led to the telemedicine initiative and helped lead the sober homes cases included in the DOJ’s historic announcement.

Since its inception in March 2007, the Health Care Fraud Strike Force program had charged more than 4,200 defendants who have collectively billed the Medicare program for approximately $19 billion.

The massive health care fraud investigation was led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys' Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic, per the DOJ.

The cases were prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys' Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.

For a breakdown of the individual cases, visit here.

For the court documents for reach case, visit here.

Here is the full press conference regarding the national health care fraud and opioid takedown:


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