For years there have been articles about the advantages of telehealth to ease costs, time and travel for patients in rural and underserved areas, and those who may have difficulty getting to their physician’s office. The CARES Act of March 2020 (Coronavirus Aid, Relief and Economic Security Act), greatly expanded the availability of telemedicine by requiring Medicare to cover and reimburse doctors at the same rates as in-person services. This resulted in many more patients having access to telehealth services for many more types of medical issues, as well as expanding the base of physicians willing to employ remote services because of the parity of reimbursement. In addition, the CARES Act lessened requirements that the telemedicine physician have a preexisting relationship with the patient, handle only certain types of diagnoses and be limited to certain geographic areas.

As is the case in many areas of highly regulated activities, beneficial changes to health care to meet certain health challenges often result in increased opportunities for fraud. Over the past year, the Department of Justice announced scores of criminal cases against telemedicine doctors, marketers, and pharmacies for abusing the system resulting in more than $1 billion in losses. Closed door pharmacies and marketers paid telemedicine doctors and nurse practitioners kickbacks (fees for “completed doctor’s orders” – scripts that were reimbursed by Medicare) for prescribing unnecessary pain, testosterone and scar creams; durable medical equipment such as braces; and genetic testing for cancer without speaking with the patient, or having only a very brief interaction. Many such orders were prescribed using pre-filled prescription forms provided by the marketers or pharmacies.

Whether unwittingly, or purposely, scores of professionals and marketers jumped on the opportunity to take advantage of the expanded telemedicine opportunities afforded by the CARES Act and various state laws that were expanded to help the millions of people suffering from Covid.

The anti-kickback statute (AKS) criminalizes the knowing and willful solicitation or receipt of any remuneration

  1. in return for referring an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or
  2. in return for purchasing, leasing, ordering, or arranging for or recommending purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program.

    42 U.S.C. § 1320a-7b(b)(1)(A)-(B).

Likewise, the AKS forbids offering or paying any remuneration to a person to induce them

  1. to refer an individual to a person for the furnishing or arranging for the furnishing of any item or service for which payment may be made in whole or in part under a Federal health care program, or
  2. to purchase, lease, order, or arrange for or recommend purchasing, leasing, or ordering any good, facility, service, or item for which payment may be made in whole or in part under a Federal health care program.

    42 U.S.C. § 1320a-7b(b)(2)(A)-(B)

While there are limited safe harbor exceptions, generally physicians, pharmacists, marketers or anyone else involved in the providing of medical equipment, drugs or services cannot be paid for the referral on a per patient basis – meaning that marketers cannot be paid for referring patients to a DME company or pharmacy where the marketer’s fee is based on a percentage or flat fee of what is collected from Medicare. Similarly, doctors cannot be paid based on a completed doctor’s order (prescription that has been reimbursed) by a healthcare provider. And pharmacies cannot pay marketers to refer prescriptions to them based on a percentage or flat fee per reimbursed script. In addition, such activities can also be charged as healthcare fraud since they are often medically unnecessary.

We have represented many doctors, pharmacists and marketing companies charged with healthcare fraud in federal court. Stahl Criminal Defense is here for all your criminal legal needs. We are experienced in all types of complex criminal matters involving a many types of electronic evidence. To contact the firm’s NJ office, call 908.301.9001 and to contact the firm’s NYC office, call 212.755.3300, or email Mr. Stahl at rstahl@stahlesq.com.