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29 September 20146 minute read

DOJ announces latest enforcement actions against an array of telehealth and telemedicine providers

As a result of the COVID-19 pandemic, state and federal governments have relaxed many requirements for telehealth providers. These temporary – and potentially, in part, permanent – changes have rapidly accelerated the increasing confluence of technology and medicine. Many venture capitalists and private equity funds have sought to join this highly regulated area. Temporarily relaxed standards combined with a continued focus on enforcement from state and federal prosecutors creates significant liability risks for new entrants to this developing frontier of medicine.


On Friday, September 17, 2021, the US Department of Justice (DOJ) announced criminal charges against 138 defendants, including 42 medical professionals, for alleged healthcare fraud against the government and private insurers that resulted in approximately $1.4 billion in alleged losses. These latest charges continue a string of telehealth-related civil and criminal prosecutions by the DOJ and the Department of Health and Human Services Office of Inspector General (HHS-OIG) and signal a continued focus on telehealth and telemedicine from government regulators.

 

The cases charged stem from five kinds of alleged misconduct.  Of those, fraud committed using telemedicine was the largest and accounted for approximately $1.1 billion in alleged losses.  In those cases, telemedicine executives allegedly paid kickbacks to doctors and nurses to order unnecessary testing, medications and durable medical equipment (DME) for patients they had never met or had only met during a brief phone conversation.  In turn, DME companies, genetic testing laboratories and pharmacies submitted allegedly false and fraudulent claims to Medicare and other government insurers.  The other cases charged involve allegedly false billings for COVID-19 relief, substance abuse treatment facilities known as “sober homes,” unlawful distribution of opioids and otherwise false and fraudulent claims to Medicare, Medicaid, TRICARE and private insurance companies for treatments that were medically unnecessary or never provided. Each of these areas has been a key area for government enforcement and will continue to be a heightened area of risk in the years to come.

 

These cases are the latest in a series of recent telehealth-related enforcement actions by the DOJ and HHS-OIG.  In an April 2019 investigation known as “Operation Brace Yourself,” the DOJ announced charges against doctors and owners of DME companies for alleged Medicare fraud totaling $1 billion.  There, DME manufacturers allegedly paid kickbacks and bribes to doctors working with fraudulent telemedicine companies in exchange for Medicare patient referrals for medically unnecessary medical equipment.  Similarly, the DOJ announced charges in September 2019 in “Operation Double Helix,” which pursued schemes involving laboratories that allegedly paid kickbacks and bribes to medical professionals who were working with fraudulent telemarketers in exchange for Medicare beneficiary referrals for unnecessary genetic tests.

 

Most recently, the HHS-OIG, along with state and federal law enforcement, brought charges in November 2020 against more than 345 defendants for allegedly fraudulent telehealth schemes involving payments to medical practitioners to order unnecessary DME, diagnostic testing and medications, causing more than $6 billion in alleged losses to federal healthcare programs. In each of these prior government actions, the conduct at issue was not unique to telemedicine; rather, it involved standard kickback conduct that paid physicians for medically unnecessary or fraudulent prescriptions.

 

The September 2021 charges, however, included reference to the telemedicine consults themselves as fraudulent (eg, through telephone consults that did not meet legal requirements) rather than just a bread-and-butter kickback scheme – though that certainly played a large part. This latest action thus shows that the DOJ will dig into the conduct of telemedicine services to confirm that the services were provided appropriately, in accordance with Medicare and Medicaid coverage policies.

 

The DOJ’s and HHS-OIG’s focus on fraud through the use of telemedicine is only expected to intensify.  After the Coronavirus Preparedness and Response Supplemental Appropriations Act (CARES Act) became effective last spring, expanding the ability of practitioners to bill Medicare and Medicaid for services provided to patients remotely, patient demand for telemedicine skyrocketed, resulting in substantial government dollars being spent on remote care. With this, the DOJ and HHS-OIG have expanded their focus on telemedicine services. The new administration is likely to increase enforcement generally, and the DOJ has explicitly identified telemedicine as a key area of enforcement.

 

Takeaways

 

Moving forward, telehealth companies, their investors and backers, and organizations doing business with telehealth companies are advised to prepare themselves for a rapidly evolving landscape and increasing government scrutiny. Both providers and their corporate funders – whether experienced in telemedicine or taking advantage of the new regulations for the first time – are encouraged to work with healthcare compliance counsel who is experienced in the practice of telemedicine to ensure that proper internal policies and procedures are implemented, including proper billing policies to align with applicable law and payor requirements.

 

Prudent providers and funders will pay careful attention to their compensation structures, including profit-sharing plans, incentive compensation and volume-based remuneration, to ensure that such relationships are consistent with fair market value and, where possible, satisfy an applicable Anti-Kickback Statute safe harbor. They will also watch out for mandatory upcoding policies, shifting prescription rules and practitioner supervision requirements for “incident-to” billing when many providers are working remotely.

 

Telehealth players are encouraged to stay abreast of technology requirements, particularly if they are not providing real-time, two-way audio and video communication, as well as consider all patient confidentiality, privacy and HIPAA regulations.  Each state regulates the practice of medicine, including with respect to the proper performance of telemedicine services, and these regulations are evolving rapidly to address technological advancements and increased patient and provider demands. Telehealth is a new frontier in medicine, and all these areas present significant risk of both criminal liability and civil exposure, including penalties and treble damages under the False Claims Act.

 

Read the DOJ announcement here.  For more information about any of these topics, please contact the authors.

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