Telemedicine presents a new frontier in the practice of medicine. It allows physicians and other healthcare professionals to provide prompt, efficient medical diagnosis in a cost-efficient manner. It also raises a number of legal issues from state licensure to the standard of care in medical malpractice cases. One of the more significant dangers for telemedicine professionals, however, is the threat of investigation or criminal prosecution for Medicare Fraud under the False Claims Act and the Anti-Kickback Act and Healthcare Fraud under the Mail Fraud and Wire Fraud Statutes.

In one of the largest Healthcare Frauds in history and in a case that is still ongoing, the U.S. Department of Justice (DOJ) less than two years ago charged five telemedicine companies multiple Durable Medical Equipment (DME) companies, and numerous healthcare providers with what was essentially a “not medically necessary” scheme to defraud the United States. Under the U.S. Department of Health and Human Services (HHS) regulations, HHS only pays for medical services that are medically necessary. DOJ alleges that the defendants in this scheme provided medically unnecessary back, shoulder, knee, and wrist braces to hundreds of thousands of patients, billing HHS over $1.2 billion.

Determining what treatment or service in a particular case or set of cases is not always straight-forward, and bureaucrats drafting regulations may far be removed from the reality of the patient’s actual needs. For example, we represented a private ambulance company and its CEO who was charged with providing medically unnecessary ambulance services for nursing home patients who required kidney dialysis. At the time, HHS regulations indicated that patients in need of dialysis could be transported by van and that ambulance transport was unnecessary. A close review of the medical records of the particular patients at issue in that case revealed that all of them had other medical conditions which made ambulance transport necessary. The Medicare Fraud charges in that case were subsequently dismissed.

According to DOJ, telemedicine companies, sometimes using call-centers in the Philippines and Latin America, would contact potential patients, inform them that they might be eligible for the braces and then referred them to telemedicine physicians who would then prescribe the braces. DME companies would then fulfill the prescription and then bill HHS for the braces. The DMEs would also provide a payment (kickback) to the telemedicine companies that generated the sale.

In another recent case, Mital Patel, owner of LabSolutions LLC (LabSolutions) was convicted of conspiracy to commit Healthcare Fraud, conspiracy to defraud the government, Anti-Kickback violations, and conspiracy to commit money laundering. The Indictment alleges that LabSolutions billed the government $463 million and collected over $187 million. Medicare beneficiaries with cancer diagnosis would be placed in contact with telemedicine doctors by telemedicine companies. The doctors would then approve what DOJ terms “expensive genetic testing” even though they were not the treating physicians and “frequently did not even speak to the patients”. LabSolutions would then pay kickbacks to the telemedicine companies and “patient brokers.”

Finally, there is the case of a Texas doctor, Daniel R. Canchola, who recently pled guilty to involvement in a $54 million Medicare Fraud scheme. According to the agreed facts, Dr. Canchola was paid thirty dollars for each doctor’s order he signed authorizing either DME or a cancer genetic test. The Medicare patients in this particular scheme were targeted using telemarketing campaigns and at health fairs. In total, Dr. Canchola received $466,000 in payments.

The Telemedicine Connection

One thing that all of these cases have in common is telemedicine. If one watches daytime television or later nighttime television, one of the common types of commercials one sees (so I’m told) are commercials for various medical devices. According to these commercials, there are a variety of items that will improve the quality of one’s life. These must-have items are also normally covered by Medicare. The key to obtaining one of these devices is a prescription from a physician.

This is where the tension between HHS and telemedicine comes in.

Medicare dollars (and private health insurance dollars for that matter) are not unlimited, and regulators at HHS want to spend as little money as possible. Sometimes, vast Medicare and Healthcare Fraud schemes do have their roots in foreign organized crime groups. At first, these schemes related to “phony” clinics billing for tests that were never performed. More recently, a number of private ambulance companies were set up around the country specifically to transport kidney dialysis patients from nursing homes to facilities where the dialysis could be performed. The practice was lucrative until the government decided the transport was not “medically necessary” and prosecuted a number of individuals involved.

See K.E. Kinkelstein, The Brighton Beach Swindle, New York Magazine (Feb. 2, 1998). Although more than twenty years old, the article provides an excellent look into Russian Organized Crime and its early involvement in Medicare Fraud schemes.

In an absolutely fascinating case, a South African computer expert name Paul Le Roux, created a company called RX Limited that focused upon the online sale of prescription medications. RX Limited would use call centers in the Philippines and elsewhere to sell non-narcotic prescription medication to citizens in the United States and collect the Medicare reimbursement for these medications. Call center personnel would contact patients who needed medications. These patients and their prescriptions would then be placed into a database. Physicians would then review the limited medical records available and approve the prescriptions, issuing a script. Once approved, independent pharmacies around the country would then fill the prescriptions. In a series of prosecutions in Minnesota in 2016 and 2017, most of the physicians and pharmacists who went to trial were acquitted—showing that this scheme may not have been illegal.

Since Le Roux’s dabbling in online pharmacies, Congress has passed The Ryan Haight Online Pharmacy Protection Act of 2008 which heavily regulates online prescriptions for certain drugs.

Unfortunately for Mr. Le Roux, his criminal ambitions did not stop with gray-market prescriptions. He branched out into vast international criminal enterprises involving murder-for-hire and drug smuggling. He is now a guest of the federal prison system where he is serving a twenty-five-year sentence.

See E. Ratliff, The Mastermind: A True Story of Murder, Empire, and a New Kind of Crime Lord, Penguin Random House (2019). This excellent book provides a comprehensive look in Le Roux and his many crimes spanning the globe. It is well worth reading.

On the other hand, DMEs often provide devices which are covered by Medicare and greatly improve the quality of life of those who receive them. Medical testing provided by medical lads is often useful in diagnosing a variety of conditions and illnesses and can improve an individual’s chances of recovery. A physician, based on his or her professional opinion may believe a medical device to be effective or a medical test to be necessary only to discover that HHS and the FBI believe it to be a fraud based upon a bureaucratic determination of medical necessity.

This sets up a trap for the unwary physician or healthcare provider. Telemedicine takes many forms, but often it involves very minimal involvement with the actual patient. Studies suggest that the average doctor spends about 15 minutes on an average patient visit with only about five minutes involving interactions with the patient. In order to maintain profitability, a doctor needs to see as many patients as possible, particularly with inadequate Medicare reimbursement rates. In the age of telemedicine, this interaction time is likely reduced still further.

Medical service providers, although they provide the key element to any potential fraud scheme—the script—they are unlikely to know or understand what is happening beyond their own personal review of medical records or examination of a patient. They most often see themselves as employees of a telemedicine company and rely upon that company for “compliance”. Rarely, if ever, do they understand who owns the telemedicine company, whether there is a relationship between the telemedicine company and the company providing the medical services or equipment, or how the telemedicine company obtains the patients in the first place. To the medical service provider, he or she is simply paid a small amount of money for a few minutes’ work.

Conspiracy and “Willful Blindness”

Medical service providers are typically charged in Medicare and Healthcare Fraud schemes as co-conspirators and “aiders and abettors.” A conspiracy is an agreement between one or more people to commit an illegal act or to commit a legal act by illegal means. An aider and abettor is someone who assists a criminal in the commission of an illegal act. Now, if the medical service provider did not share the intent to commit the crime that was the object of the conspiracy, then he or she is not guilty of conspiracy. If the medical service provider did not know that he or she was assisting another person commit a crime, then he or she is not guilty of aiding and abetting.

The problem with conspiracy and aiding and abetting charges is that there is almost never direct evidence of intent, and the government traditionally relies upon “circumstantial” evidence. Until the 1950s, in federal courts, juries were instructed that in order to convict a defendant based upon circumstantial evidence, the jury had to find that the circumstantial evidence excluded every reasonable hypothesis except that of guilt. In Holland v. United States, the Supreme Court held that the high burden for using circumstantial evidence was no longer required. This allows a jury to convict even if circumstantial evidence is less than certain.

As a practical matter, it is frequently impossible to prove or determine what intent was in the mind of the medical services provider and that, ultimately, a jury must decide. The government will also most likely obtain the benefit of a “willful blindness” instruction. The False Claims Act, Anti-Kickback Act, as well as the Mail Fraud and Wire Fraud statutes all require a specific intent to defraud, or an actual intent to commit the crime that was the object of the conspiracy. A “willful blindness” instruction excuses the government from proving specific intent and allows a jury to convict a defendant if it finds that a defendant intentionally avoided gaining knowledge that would have allowed him or her to know of the crime.

Practical Advice for the Telemedicine Provider Caught in a Medicare Fraud/ Healthcare Fraud Investigation

What is the medical service provider to do when federal agents from either the FBI or HHS OIG come knocking? In the ideal world, one would expect he or she could simply explain his or her non-involvement and relax. Unfortunately, this would be a mistake. While it may be appropriate to speak to investigators with counsel present and only with counsel present, there is a lot of preliminary work a white-collar defense attorney will have to do before that conversation occurs (including determining whether it is in the medical service provider’s best interest to talk to investigators). The first thing the medical service provider should do is retain the right attorney.

This is easier said than done, and there are substantial hurdles to retaining the first attorney. The first is finding an attorney knowledgeable in this complex and nuanced area of the law. Most criminal defense attorneys are not familiar with the federal and state laws regulating this industry, and most “compliance” attorneys who draft compliance programs are not equipped to actually defend someone in a criminal investigation. The proper attorney for the job is the white-collar defense attorney who has defended medical service providers but in investigations and at trial.

Even here, there are many attorneys who do practice in this area and market themselves as white-collar criminal defense lawyers who do not try cases. Some are more interested in negotiating a quick plea than actually defending the client. They will point to the government’s 97% conviction rate and ambiguity in the evidence to convince the client that a guilty plea is the only option. Guilty pleas are frequently in a client’s best interest, but the right attorney for a Medicare or Healthcare Fraud case is one who is prepared to mount a rigorous defense.

The second major hurdle is cost. Just as specialized professionals in the medical profession command greater pay than other doctors, so do lawyers that are at the top of their profession. The proper way to look at this issue is what value does the lawyer bring and not how much does he or she cost. The earlier the attorney is brought into the case, the greater the chances for a successful outcome. Trying to economize early in the representation greatly increases the chances of an indictment.

A Medicare or Healthcare Fraud investigation can have life altering repercussions. Through no fault of his or her own, the medical service provider can find himself or herself connected to an intricate conspiracy with real conspirators misrepresenting the medical service provider’s role. The medical service provider may even be indicted or find himself or herself under immense pressure to plead guilty to something. The loss of the medical license, the inability to earn a living, and prison are all possible.

If you or someone you know finds himself or herself in this unfortunate situation, give us a call or contact us by email. We are happy to discuss the matter with you confidentially.

Dennis Boyle
Founder / Partner

Mr. Dennis Boyle is an accomplished white-collar criminal defense and complex civil litigation attorney who practices throughout the United States and internationally.

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