DOJ: Owner of Health Care Software Company Sentenced to 19 Years in Prison for $1B Medicare Fraud

• The scheme involved generating false doctors’ orders and prescriptions for orthotic braces and other items using the DMERx platform.
• Medicare was fraudulently billed for orthotic braces for more than 346,000 beneficiaries, with Medicare and other insurers paying over $450 million.

A Kansas CEO, owner of HealthSplash and DMERx, was sentenced to 19 years in prison for orchestrating a telemedicine fraud scheme that generated false doctors’ orders and prescriptions, defrauding Medicare and other federal health care benefit programs out of more than $1 billion. The scheme aggressively targeted hundreds of thousands of Medicare beneficiaries, billing Medicare for medically unnecessary orthotic braces and other items.

The fraudulent operation connected pharmacies, DME suppliers, and marketers with telemedicine companies that accepted illegal kickbacks for signed doctors’ orders. Medicare was billed for four braces per beneficiary, with at least 21 orthotics prescribed through DMERx to over 1,200 beneficiaries. The scheme was concealed through sham contracts and manipulation of doctors’ orders to avoid Medicare audits.

• 19 years prison sentence for Kansas CEO
• $1 billion amount defrauded from Medicare and other programs
• 346,000 Medicare beneficiaries fraudulently billed for orthotic braces

• Review claims involving DMERx and HealthSplash for false doctors’ orders and prescriptions.
• Audit orthotic brace billing for patterns of four braces per beneficiary and at least 21 orthotics prescribed to over 1,200 beneficiaries.
• Scrutinize contracts and doctors’ orders for evidence of manipulation or removal of telemedicine references to avoid Medicare audits.

This case highlights the vulnerability of federal health care programs to large-scale telemedicine fraud schemes, where false prescriptions and kickbacks can result in massive financial losses and undermine program integrity. Compliance officers must be vigilant in detecting patterns of fraudulent billing, especially involving internet-based platforms and telemedicine providers. The DOJ’s focus on prosecuting such schemes and the involvement of multiple agencies underscore the importance of robust internal controls, thorough audits, and cross-agency cooperation to prevent and detect health care fraud.