On Friday, May 10, 2024, the Department of Justice issued the following press release:
A federal jury convicted a Michigan doctor today for causing the submission of over $6.3 million in fraudulent claims to Medicare for medically unnecessary orthotic braces ordered through a telemarketing scheme.
According to court documents and evidence presented at trial, Sophie Toya, M.D., 55, of Bloomfield Hills, signed thousands of prescriptions for orthotic braces for over 2,500 Medicare patients during a six-month period. Toya was not the treating physician for any of these patients and, instead, was connected with some of the patients over the telephone through a telemarketing scheme and spoke to the patients briefly before signing orthotic brace prescriptions for them. For other patients, Toya signed prescriptions without having any contact with them. In one instance, Toya prescribed a lower back brace, right and left shoulder braces, a right wrist brace, right and left knee braces, and right and left ankle braces for a single Medicare patient. Toya also prescribed multiple braces for undercover agents posing as five different Medicare patients after speaking to each agent for less than a minute over the telephone.
The evidence presented at trial showed that Toya could not possibly have diagnosed the patients or determined that the braces were medically necessary for them. Nonetheless, Toya signed medical records and prescriptions for braces that falsely represented that the braces were medically necessary and that she diagnosed the beneficiaries, had a plan of care for them, and recommended that they receive certain additional treatment. Toya’s false prescriptions were used by brace supply companies to bill Medicare more than $6.3 million. Toya was paid approximately $120,000 in exchange for signing the fraudulent prescriptions.
The jury convicted Toya of one count of healthcare fraud and five counts of false statements relating to healthcare matters. She is scheduled to be sentenced on Aug. 15 and faces a maximum penalty of 10 years in prison for health care fraud and five years in prison on each of the false statements relating to health care matters counts. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.
Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division; Assistant Director Michael D. Nordwall of the FBI’s Criminal Investigative Division; and Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services Office of Inspector General (HHS-OIG) made the announcement.
The FBI and HHS-OIG investigated the case. The case was charged as part of Operation Rubber Stamp, a coordinated nationwide law enforcement operation that targeted medical professionals who participated in fraudulent telemedicine schemes.
DME suppliers can draw the following lessons from the conviction:
It is common for a DME supplier to ship products to patients across multiple states. When marketing to these patients, suppliers may face challenges, particularly involving the patient’s local physician. A patient might want to buy from an out-of-state supplier but driving to the physician’s office for an order can be inconvenient. Even if the patient visits the local physician, the physician may decide the product is unnecessary or hesitate to send the order to an out-of-state supplier. In response, some DME suppliers enter problematic arrangements, often involving “telehealth” companies.
A legitimate telehealth company contracts with numerous physicians across multiple states and receives payment from self-funded employers, health plans, and patients who pay per visit. However, issues arise when a DME supplier aligns with a telehealth company funded directly or indirectly by the supplier. For example, a supplier might purchase leads from a lead generation company (LGC). The LGC sends these leads to the telehealth company, which schedules telehealth encounters with its contracted physicians. These physicians sign orders for products and send them to the supplier. The supplier compensates the LGC for the leads, which pays the telehealth company, and the telehealth company compensates the physicians. The supplier then bills Medicare.
This arrangement can be problematic because the DME supplier is paying the ordering physician, thereby violating the federal anti-kickback statue. According to the “one purpose” test handed down by courts, if any part of the payment is intended to reward a referral, the AKS is violated, regardless of the primary purpose of the payment.
When a DME supplier pays a telehealth physician directly or indirectly, and the physician orders a product provided by the supplier and reimbursed by a federal healthcare program, this arrangement will be seen as a kickback. In contrast, a legitimate telehealth arrangement does not involve the telehealth company receiving compensation from DME suppliers; its revenue comes from employers, health plans, or patient fees, ensuring no financial relationship between the ordering physician and the product supplier.
Critical lessons from recent investigations in the DME/orthotics space include:
- If it seems too good to be true, it probably is: When an LGC promises to deliver orders for payment, it’s often too good to be true. The supplier will likely find that the source of payment to the telehealth physician is the supplier itself.
- A spike in claims submissions will attract attention: A significant increase in claims submissions by a DME supplier will draw scrutiny whether the spike is related to existing products or a new product line.
- Legitimate telehealth companies are funded by patients, insurers, and employers. Establishing a legitimate telehealth company requires substantial investment and time. It is initially funded by investors and loans and later by patient subscriptions, employer contracts, and insurance payments. A sham telehealth company avoids this by receiving funding from DME suppliers that receive telehealth orders.
- DME suppliers are on the firing line: DME suppliers, licensed and holding Medicare and Medicaid numbers and third-party payor contracts, are at risk if an arrangement is not legally compliant. LGCs, focused on selling leads, do not face the same level of scrutiny or risk.
By understanding these points, DME suppliers can avoid problematic arrangements.
Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, a law firm with a national health care practice based in Texas. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].
Jacque K. Steelman, JD, is a member of the Health Care Group at Brown & Fortunato, PC, a law firm with a national health care practice based in Texas. She represents pharmacies, infusion companies, HME companies, manufacturers, and other health care providers throughout the United States. Ms. Steelman can be reached at (972) 684-5789 or [email protected].
