AMARILLO, TX – The CMS Administrator and other Trump II Administration officials have been vocal that the DME industry is fraud-ridden and they intend to root out the fraud. In terms of government enforcement, DME suppliers are in a hostile environment.

A May 8, 2026 Department of Justice (“DOJ”) press release states, in part:

A former NFL player who owned a marketing company and was the beneficial owner of eight durable medical equipment (DME) companies was sentenced yesterday to 196 months in prison for his role in a yearslong scheme to bilk Medicare and the Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA) out of nearly $200 million by selling patient information and sham doctors’ orders for orthotic braces that patients did not want or need.

In addition to the prison sentence, the defendant, Joel Rufus French, 47, of Armory, Mississippi, was ordered to pay $110,753,619 in restitution and to forfeit approximately $17 million that the government seized from bank accounts and other assets.

“Fueled by lies, bribes, and overseas telemarketers, this corrupt scheme preyed on senior citizens and disabled veterans to flood the country with unnecessary medical devices — and then billed the taxpayer for it,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “Today’s sentence makes clear that if you target America’s elderly, sick, or vulnerable — and rob America’s purse doing so — you will be targeted and brought to justice.”

“The defendant orchestrated a brazen, yearslong scheme that preyed on elderly patients and the families of disabled and deceased veterans to steal millions from Medicare and CHAMPVA,” said Acting Deputy Inspector General for Investigations Scott J. Lampert of the U.S. Department of Health and Human Services Office of Inspector General (HHS‑OIG). “By hiding behind overseas call centers, sham telemedicine companies, and straw‑owned DME suppliers, he exploited some of the most vulnerable people these programs were created to protect. This lengthy sentence underscores the seriousness of his crimes and sends a clear message: HHS‑OIG and our law enforcement partners remain steadfast in safeguarding taxpayer‑funded programs and ensuring those who seek to defraud them will be found, stopped, and held accountable.”

…

According to court documents and evidence presented at trial, French worked with overseas telemarketing call centers that pressured elderly Americans to provide their personal and health insurance information and agree to accept medically unnecessary orthotic braces. In certain instances, the call centers altered call recordings to make it seem like Medicare patients agreed to the braces when they did not.

French paid sham telemedicine companies kickbacks to obtain signed doctors’ orders from doctors and nurse practitioners who never examined, and often never even spoke to, the patients. He sold the orders to marketers and medical supply companies, which then submitted claims to Medicare. French also defrauded Medicare and CHAMPVA, the health care program for spouses and children of veterans who have or had a permanent and total service-connected disability or who died from a service-connected condition, by billing the programs for orthotic braces through eight DME supply companies that he owned and managed, using straw owners and false documents to hide his connection to the companies from Medicare. French also laundered approximately $225,000 in cash from a bank in Mississippi, over $10,000 of which was placed in a bag and driven to Orlando to pay accomplices who sold him beneficiaries’ personal and insurance information.

After a six-day jury trial ending in February, French was convicted of conspiracy to commit health care fraud and wire fraud, conspiracy to commit money laundering, and conspiracy to offer, pay, solicit, and receive kickbacks.

Lessons for DME Suppliers

• Trump II Administration is not a Friend of the DME Industry – The CMS Administrator and other Trump II Administration officials have been vocal that (i) the DME industry is fraud-ridden and (ii) they intend to root out the fraud. In terms of government enforcement, DME suppliers are in a hostile environment.
• If Something Feels Strange, Don’t Do It – There is “fraud” … and then there is “stupid.” What Mr. French did falls into the “stupid” category. How did he possibly think that what he was doing would end well? If your brain tells you one thing … and if your stomach tells you something else … ignore your brain and trust your stomach. It is human nature to intellectually rationalize a dishonest decision … but our stomach never lies.
• Be Aware of the Government’s Enforcement Priorities – Using Google and AI, DME suppliers need to research the government’s enforcement priorities. Search terms include “OIG Annual Work Plan, “DME Fraud Investigations,” and “Department of Justice Health Care Fraud Press Releases.” It is important to periodically review the OIG’s website. It contains a great deal of information that is constantly being updated. By taking these steps, DME suppliers will gain an intuitive feel for the type of activities that will be critically scrutinized by government enforcement agencies.
• Be Careful in Using Offshore Companies – It is legal and proper to contract with offshore companies…but as often is the case, “the devil is in the details.” It is generally acceptable to use an offshore company for “BPO” (Business Process Outsourcing). However, if the offshore company is engaged in marketing/patient generation, the DME supplier is treading on dangerous ground. Before contracting with an offshore company, the DME supplier should consult with a health care attorney. The attorney will guide the DME supplier so that it does not inadvertently make mistakes. For example, while Medicare generally does not restrict the use of offshore companies, some state Medicaid programs place restrictions on such use. Likewise, Medicare Advantage Plans and Medicaid Managed Care Plans may restrict the use of offshore companies.
• Be Wary of Telehealth Companies – Telehealth, when implemented properly, is a good thing. Where a DME supplier finds itself in hot water is when the telehealth company it is contracted with is a “sham” company designed to funnel physician orders to whoever will pay for them. A DME supplier should not contract with a telehealth company until the supplier first consults with a health care attorney.
• Be Even More Wary of Marketing Companies and Lead Generation Companies (Collectively Referred to as “LGCs”) – A DME supplier needs to be very cautious about contracting with an LGC. The arrangement needs to be carefully structured so that it does not violate the federal anti-kickback statute and applicable state anti-kickback statutes. The federal anti-kickback statute and their state counterparts are criminal in nature. If there is a government enforcement action, the government will focus on the company billing Medicare (i.e., the DME supplier). As a general rule, the LGC will “slink away into the night.” A DME supplier should not contract with an LGC until the supplier first consults with a health care attorney.

Jeffrey S. Baird, JD, is chairman of the Health Care Group at Brown & Fortunato, PC, 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].

AAHOMECARE’S EDUCATIONAL WEBINAR

Asset vs. Stock Purchase of a DME Supplier

Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato & Jason M. Temple, Esq., Brown & Fortunato

Tuesday, June 2, 2026

1:30-2:30 p.m. CENTRAL TIME
It is common in the DME industry for DME suppliers to be purchased…and sold. This program will discuss the steps to be taken to successfully purchase and sell a DME supplier. In particular, the program will discuss the difference between an asset purchase and a stock purchase…including dispelling common misperceptions such as “the purchaser of the stock of a DME supplier assumes the liabilities of the supplier.” Whether a transaction is an asset or stock purchase is particularly relevant in light of (i) the 36-month rule addressing change in majority ownership and (ii) the moratorium against the issuance of new PTANs. In addition, the program will discuss the mechanics of achieving a successful sale or purchase, including (i) execution of a Mutual Nondisclosure Agreement, (ii) transmittal of financials from the seller to the buyer, (iii) execution of a letter of intent, (iv) conduct by the buyer of “due diligence,” (v) negotiation and execution of the Asset Purchase Agreement/Stock Purchase Agreement and related closing documents, and (vi) providing notification to government agencies, third-party payors, and others.

Register for Asset vs. Stock Purchase of a DME Supplier on Tuesday, June 2, 2026, 1:30-2:30 p.m. CT, with Jeffrey S. Baird, Esq. and Jason M. Temple, Esq., of Brown & Fortunato.