July 2019

Telemedicine permits two-way, real time interactive communication between health professionals and patients. Its recent expansion has dramatically improved patient health by providing new access to health care for rural Americans and by providing a cost-efficient alternative to traditional face-to-face medical care for common ailments. The DOJ’s recent focus on targeting telemedicine companies involved in fraud should concern lawful executives and physicians involved in the practice that may be caught up in costly investigations, civil asset forfeiture and potentially devastating criminal indictments.

In April, the DOJ announced charges against 24 telemedicine and durable medical equipment (“DME”) company executives and physicians for alleged fraud totaling $1.2 billion. The crackdown spanned across the country, with federal law enforcement executing over 80 search warrants in 17 federal districts. The scheme involved the payment of illegal kickbacks and bribes by DME companies in exchange for Medicare patients by physicians working for telemedicine companies, prescribing medically unnecessary back, wrist, shoulder and knee braces. Employees at call centers would reach out to elderly patients offering free or low-cost medical equipment without regard for medical necessity. The call centers then paid kickbacks and bribes to telemedicine companies who then paid physicians to prescribe equipment without sufficient patient interaction before selling the orders to DME companies who fraudulently billed Medicare.

Several of the prosecutions also involved forfeiture of assets associated with the offenses. Civil asset forfeiture has come under scrutiny because it only requires the government have probable cause that assets and property are connected to criminal activity before seizure, a lower standard of proof than the beyond the reasonable doubt standard for actually convicting someone of a crime. Civil forfeiture may even precede an indictment or notice of investigation, making assets inaccessible for long periods of time, leaving individuals and businesses significantly crippled or entirely unable to operate.

The April action is just the latest example of the DOJ’s increased focused on telemedicine. Similar fraud investigations were announced late last year against telemedicine companies, company executives and physicians. In light of this recent trend, industry participants should exercise caution consulting with regulatory experts to ensure robust compliance programs are in place, particularly in light of the DOJ’s recent re-emphasis on exercising significant discretion in rewarding companies with strong compliance programs during investigations.