DOJ Investigations into Telemedicine Companies: What You Need to Know
Telemedicine has revolutionized healthcare delivery, expanding access to medical services for patients across the country and helping keep healthcare costs lower.
While telemedicine is legal, it operates within a complex, evolving framework of federal and state regulations.
This intricate regulatory environment can create opportunities for noncompliance, fraud, and abuse, thereby increasing scrutiny from the Department of Justice (DOJ).
Telemedicine companies and their associated providers must understand this heightened focus to protect their operations and careers, and equally importantly, know when it's time to hire a federal criminal defense attorney to protect their interests.
Key Takeaways
- The DOJ is actively investigating telemedicine companies for exploiting loopholes, mainly focusing on schemes with medically unnecessary DME, genetic tests, and controlled substances such as Adderall.
- These schemes often involve telemarketing to seek Medicare or private insurance patients for doctors paid to sign orders, resulting in billions in fraud.
- Providers should watch out for warning signs such as not following up with patients, compensation based on order volume, recruiting patients through aggressive advertising for free items, and billing exclusively to federal programs. These practices could expose providers to criminal or civil liability.
- Kickbacks and referrals involve telemarketing firms paying telemedicine companies to find Medicare or private patients, who then pay doctors to approve test and equipment orders.
- Unnecessary services include prescribing DME (braces), cancer genetic tests, or stimulants such as Adderall without a proper patient need.
- Providers frequently have limited contact with patients, which can lead to unnecessary orders.
- Significant actions are being taken against companies such as Done Global (Adderall) and laboratories involved in genetic testing schemes.
- High-risk indicators include companies that recruit patients through telemarketing for free or low-cost items, pay based on the number of records reviewed rather than time or effort, or solely serve federal programs.
- A federal healthcare fraud investigation involves allegations that individuals or organizations intentionally submitted false claims, violated regulations, or improperly received payments from federal healthcare programs.
The Rise of Federal Scrutiny
The rapid expansion of telehealth services, accelerated by the COVID-19 pandemic, led to a significant increase in federal healthcare spending in this sector.
Consequently, the DOJ and other federal agencies, such as the Office of Inspector General (OIG), have intensified their efforts to identify and prosecute fraudulent activities within the telemedicine industry.
These investigations are not limited to fly-by-night operations.
Legitimate telemedicine companies can inadvertently run afoul of regulations, making them targets for audits and criminal inquiries.
Federal investigators are actively looking for specific red flags that may indicate fraudulent behavior.
What Investigators Look For
DOJ investigators typically focus on arrangements and billing practices that suggest a departure from established medical and legal standards. Common areas of interest include:
- Kickbacks and Improper Referrals: Investigators scrutinize financial relationships between telemedicine companies, marketing firms, physicians, and pharmacies. Arrangements that involve paying for patient referrals, such as paying marketers per patient or per prescription, may violate the Anti-Kickback Statute (AKS).
- Lack of Physician-Patient Relationship: A key concern is whether a legitimate relationship was established before treatment. Prescribing medications or ordering durable medical equipment (DME) without a meaningful patient consultation, often conducted via a brief phone call or online questionnaire, is a major red flag.
- Medically Unnecessary Services: Investigators analyze claims data for patterns suggesting that services, prescriptions, or DME were not medically necessary. This includes an unusually high volume of claims for specific high-reimbursement items from a single provider or group.
- Improper Billing and Coding: The use of incorrect billing codes to inflate reimbursement (upcoding) or billing for services that were never rendered are classic forms of healthcare fraud that the DOJ aggressively prosecutes.
Potential Criminal Charges
A federal investigation into a telemedicine company can sometimes result in criminal charges for both the corporation and the individuals involved, including executives and participating providers. The most common charges include:
- Healthcare Fraud: This charge involves knowingly and willfully executing a scheme to defraud any healthcare benefit program. A conviction can lead to substantial fines and up to 10 years' imprisonment per offense.
- Violations of the Anti-Kickback Statute: The AKS makes it a federal felony to knowingly and willfully offer, pay, solicit, or receive any remuneration to induce or reward patient referrals for items or services payable by a federal healthcare program. Penalties include fines up to $100,000 and imprisonment for up to 10 years per kickback.
- Wire Fraud: Because telemedicine inherently involves the use of electronic communications across state lines to execute a fraudulent scheme, charges of wire fraud are common.
- Conspiracy: If two or more people conspire to commit healthcare fraud, they can be charged with conspiracy, which carries its own set of significant penalties.
How a Federal Criminal Defense Attorney Can Help
Engaging a federal criminal defense attorney with specific experience in healthcare compliance at the earliest sign of an investigation is critical. An experienced attorney can help by:
- Conducting an Internal Investigation: Counsel can perform a privileged internal review to understand the company's practices, identify potential vulnerabilities, and assess the scope of potential government claims.
- Communicating with Investigators: A defense attorney can act as an intermediary between the company and government agents, managing document requests, subpoenas, and interviews to protect the client's rights.
- Developing a Defense Strategy: Based on the facts of the case, an attorney can build a robust defense to any potential criminal charges.
Possible Defenses to Healthcare Fraud Allegations
Several defenses may be available to a telemedicine company or provider facing allegations of fraud. These strategies depend entirely on the specific circumstances of the case:
- Lack of Intent: Most healthcare fraud statutes require the government to prove that the defendant acted "knowingly and willfully." A strong defense can be built by demonstrating that any billing errors or regulatory violations were unintentional mistakes, not part of a deliberate scheme to defraud.
- Safe Harbor Compliance: The Anti-Kickback Statute contains "safe harbors" that protect certain payment arrangements and business practices. If a financial relationship fits squarely within a safe harbor, it is not subject to prosecution under the AKS. An attorney can analyze whether these protections apply.
- Medical Necessity: A defense can be mounted by presenting evidence, including patient records and expert testimony, to prove that the services or items prescribed were, in fact, medically necessary for the patient's condition.
- Reliance on Expert Advice: In some cases, a company may have structured its operations based on the advice of legal or compliance experts. This can be used to argue that there was no intent to violate the law.
If you were accused of telemedicine fraud, contact our federal criminal defense law firm, Eisner Gorin LLP, for a case review.