Telemedicine is often used to recruit physicians and patients and make it easy for physicians to prescribe patients medicine or durable medical equipment. The physicians who agree to work for these companies need to ensure that the companies' practices are compliant with the laws and regulations. Companies who consider telemedicine need to consider whether they are compliant. I hear comments such as "telemedicine is legal" without any idea that it still needs to comply with all laws and regulations and that the marketing and payment arrangements can violate the law.
On September 6, 2019, Lester Stockett, the owner and chief executive officer (CEO) of a telemedicine company pleaded guilty to one count of conspiracy to defraud the United States and pay and receive health care kickbacks, and one count of conspiracy to commit money laundering. Mr. Stockett was the owner of Video Doctor USA (Video Doctor) and Telemed Health Group LLC (AffordADoc) (collectively, the Video Doctor Network), and was the CEO of AffordADoc. In connection with his plea agreement, Mr. Stockett agreed to pay $200 million in restitution to the United States, as well as forfeit assets and property traceable to proceeds of the conspiracy to defraud the United States and conspiracy to commit money laundering. Mr. Stockett's sentencing is set for Dec. 16 before U.S. District Judge Madeline Cox Arleo of the District of New Jersey, who accepted his plea.
In connection with his guilty plea, Mr. Stockett admitted that he and others agreed to solicit and receive illegal kickbacks and bribes from patient recruiters, pharmacies, brace suppliers and others in exchange for arranging for doctors to order medically unnecessary orthotic braces (braces) for beneficiaries of Medicare and other insurance carriers. The beneficiaries were contacted through an international telemarketing network that used call centers in the Philippines and throughout Latin America to approach hundreds of thousands of elderly and/or disabled patients.
Mr. Stockett admitted that, in order to obtain the orders that were transmitted in exchange for kickbacks and bribes, he and other executives and employees of the Video Doctor Network paid illegal kickbacks and bribes to health care providers to order medically unnecessary braces for Medicare beneficiaries. Many of these orders were written after only a short telephone call between the health care provider and the beneficiary, with whom the health care provider had no prior doctor-patient relationship.
Mr. Stockett admitted that he and others transferred the brace orders to co-conspirator brace suppliers to support more than $424 million in false and fraudulent claims to Medicare that were submitted by brace suppliers. Medicare paid these brace suppliers in excess of $200 million for these claims.
Mr. Stockett admitted that he and other executives and employees of the Video Doctor Network were aware that it was a violation of the Anti-Kickback Statute for the Video Doctor Network or its owners or investors to receive money, directly or indirectly, from patient recruiters, purported marketers or marketing organizations, brace suppliers or pharmacies. Mr. Stockett acknowledged that he and others concealed the illegal kickbacks and bribes by causing them to be paid indirectly through nominee companies and bank accounts, opened by Mr. Stockett and others in nominee names both in the United States and in foreign countries, including in the Dominican Republic. Mr. Stockett further admitted that he and others hid the existence of the foreign companies and bank accounts by making, or causing to be made, false statements to financial institutions and falsely reporting to the IRS and others that they and others had no influence over foreign bank accounts.
There was an investment fraud component. Mr. Stockett admitted that he and other owners and executives of the Video Doctor Network defrauded investors and others by making false and fraudulent representations that the Video Doctor Network was a legitimate telemedicine enterprise that made revenue of “$10 million per year” and “20% profit” from payments by beneficiaries who enrolled in a membership program and paid for the telemedicine consultations. These statements were false because revenue was obtained by the Video Doctor Network through the receipt of illegal kickbacks and bribes, Mr. Stockett admitted.
This case was prosecuted because it involved Medicare billing and payments. We see many companies that use telemedicine for prescriptions of medications for cash and these companies face regulatory issues but will often not be prosecuted due to the lack of insurance or Medicare billing. Physicians who work or associate with these companies can still face professional scrutiny from their Board, investigations or civil lawsuits.
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