The owners of four orthotic brace suppliers and several marketing companies were charged in a complaint unsealed on April 21, 2021 for allegedly orchestrating a nationwide kickback and bribery scheme to order medically unnecessary orthotic braces for Medicare beneficiaries.
The complaint alleges that between October 2017 and April 2019, the five individuals participated in a nationwide conspiracy to defraud Medicare, TRICARE, Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA), and other federal and private health care benefit programs through the payment and receipt of illegal health care fraud kickbacks in exchange for orthotic brace orders that lacked medical necessity with a total loss of approximately $65 million.
The complaint further alleges that three of the defendants operated or controlled marketing call centers to solicit beneficiaries of federal and private health care benefit programs and to entice them to accept orthotic braces regardless of need. The three allegedly paid telemedicine companies illegal kickbacks and bribes in exchange for doctors and other medical professions signing brace orders and falsely swearing to their medical necessity. They allegedly concealed the kickbacks and bribes by entering into sham contracts with the fraudulent telemedicine companies and issuing invoices describing the payments as “marketing” or “business process outsourcing” expenses.
Two of the defendants purchased these brace orders through orthotic brace suppliers in Georgia and Florida through which they billed the federal and private health care benefit programs for the orders. To conceal their ownership interests in the brace suppliers, they allegedly used nominee owners and provided those names to Medicare in lieu of their own.
The complaint further alleges that one of the defendants connected two other defendants to other co-conspirators and arranged for two defendants to sell orthotic brace orders to orthotic brace suppliers in New Jersey and Florida in exchange for illegal health care kickbacks and bribes. One defendant and others allegedly paid two other defendants kickbacks and bribes for each federal health care beneficiary for whom orthotic brace orders were sold to orthotic brace suppliers to be billed to Medicare, TRICARE, CHAMPVA, and other federal and private health care benefit programs. To conceal the kickbacks and bribes, the two defendants allegedly created sham invoices labeling the payments as “marketing” and “business processing outsourcing” expenses. To conceal his ownership interest in the brace supplier, the one defendant used a nominee owner on forms submitted to Medicare and used shell corporations to transfer the funds he paid in connection with the purchase of the supplier.
The charges (health care fraud and conspiracy to commit health care fraud) are punishable by a maximum potential penalty of 10 years in prison and a $250,000 fine, or twice the gross profit or loss caused by the offense, whichever is greater. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
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