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Federal Arrests for DME & Telemedicine Fraud

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The federal government is increasingly targeting physicians for participating in the fraudulent prescription of Durable Medical Equipment. A trusted locum may contact a physician tenens company and offer a part-time position reviewing medical records online. For young MDs, the work is easy, fits their schedule, and seems natural as they are from a computer generation. The results can be devastating.

A recent spate of prosecutions and arrests has spread across the United States. Many physicians, especially young physicians seeking to supplement their income, have been or will be arrested. Here is some history preceding the Blackman, Schreck, and Cox arrests.

Prosecution for DME Fraud

In December of 2022, the owner of a Durable Medical Equipment Company was arrested as part of an (alleged) $ 17 Million Kickback Conspiracy. The person arrested (Alexandra Stchastlivtseva) owned several durable medical equipment (DME) companies. The government claims that Stchastlivtseva paid kickbacks and bribes to several telemedicine and marketing companies.

How the DME Frauds Work

The DME supplier makes a profit. The supplier hires marketing entities to contact the Locum Tenens company and hire doctors to write prescriptions. The Locum Tenens company connects the MD with the marketing/telemedicine company, so there is an air of legitimacy granted to these fly-by-night operations.

Patient charts are created and sent to the doctor for a quick review. The charts almost always justify a prescription. Sometimes, the same file is sent to multiple doctors.

The files are often obtained by the marketing companies that give seminars at senior centers and other places where they can manipulate and exploit these potential patients. The exchange is a free meal and a bit of fun in exchange for filling out a form. The marketing company needs a name, DOB, and Medicare number. Then, they create a file and ship it to the doctor. – electronically.

In the Stchastlivtseva case, Medicare paid more than $17.3 million, and since at least part of the money was reinvested in the scheme, Stchastlivtseva and others were charged with money laundering. The potential criminal sentence is more than 20 years in prison.

The elderly may see strange devices and equipment on their Medicare Summary Notice (MSN) or Explanation of Benefits (EOB). Equipment that was never ordered may show up at their front door. The marketing entities are usually untouchable as they fly by night and often overseas. The equipment suppliers and the prescription writing doctors are most commonly arrested.

Learn more about our Medical Fraud Practice.

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