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Telemedicine fraud case involving kickbacks underlines DOJ enforcement focus

A guilty plea in a $73 million Medicare kickback fraud conspiracy case in Florida is the latest result in a string of enforcement actions involving telemedicine fraud that the US Department of Justice has taken in the past year.

Leonel Palatnik, a co-owner of medical lab company Panda Conservation Group LLC, pleaded guilty last week to charges that he conspired with other co-owners and Michael Stein, the owner of another entity called 1523 Holdings LLC, to pay kickbacks to induce telemedicine providers to send genetic testing orders to Panda’s labs. Altogether, the scheme amounted to a conspiracy to defraud Medicare of $73 million, according to DOJ.

Panda’s labs and 1523 Holdings disguised the payments through sham contracts for phony IT and consultation services, DOJ said in a press release.

1523 Holdings additionally exploited the coronavirus crisis by offering telehealth providers access to Medicare beneficiaries. In exchange, DOJ alleged, the providers referred the Medicare beneficiaries to Panda’s labs for expensive and medically unnecessary cancer and cardiovascular genetic testing – all on the taxpayers’ dime.

Palatnik faces a maximum penalty of 15 years in prison for one count of conspiracy to offer kickbacks and one count of paying a kickback. He is scheduled to be sentenced on Nov. 9.

DOJ announced in February that it would prioritize pursuing telemedicine fraud as this type of misconduct has flourished during the coronavirus pandemic. Restrictions on telehealth for Medicare patients were eased during the pandemic to make healthcare easier to access.

DOJ’s efforts have netted many successful enforcement actions involving telemedicine fraud in the past year, including a massive bust last September involving 86 criminal defendants who allegedly had submitted false and fraudulent Medicare claims involving telemedicine that totaled $4.5 billion.

How Telemedicine fraud works

Telemedicine is an important way for those who are unable to go to a doctor’s office to consult with their healthcare providers. Patients who have concerns about possible Covid-19 exposure have relied on telemedicine for access to healthcare advice during the pandemic. Unfortunately, some fraudsters exploit the need for telehealth for their own fraudulent financial gains.

In some instances, telemarketing companies work with sham telemedicine companies that find doctors willing to be paid to write medically unnecessary prescriptions and laboratory testing or treatment orders for Medicare beneficiaries without speaking to them or seriously evaluating their conditions and medical needs. Often, elderly, disabled, immunocompromised and otherwise vulnerable patients are targeted in fraudulent telehealth schemes.

Telemedicine fraud schemes result in false or fraudulent bills to Medicare and Medicaid in many ways:

  • Kickbacks paid to doctors or others to get referrals for healthcare services in violation of the Anti-Kickback Statute.
  • False billing or coding for healthcare services.
  • Unnecessary or excessive prescriptions – sometimes including opioid prescriptions.
  • Unnecessary or non-existent screening tests for cancer and other conditions. Often the test results are not even sent to patients.
  • Billing Medicare for durable medical equipment sent to Medicare beneficiaries who don’t need the equipment or didn’t request it.

Whistleblowers can report telemedicine fraud

The Panda labs case did not involve a whistleblower, but often it is industry insiders with specialized knowledge of medical billing and the healthcare industry who are in the best position to detect and report fraud.

The False Claims Act empowers whistleblowers to sue entities and individuals who are defrauding the government and recover the stolen funds on the government’s behalf. In most successful whistleblower cases, the government joins whistleblowers and their attorneys join with to pursue the lawsuit – called “qui tam” lawsuits.

The False Claims Act also offers whistleblowers protection from employer retaliation as well as rewards. Whistleblowers who file qui tam lawsuits are entitled to 15 percent to 30 percent of the amount the government recovers as a result of their cases.

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