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Category: Daily News

Hanover Launches Wearable Sensor Program to Reduce Injuries

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The Hanover Insurance Group, Inc. announced the launch of its Hanover i-on Sensor Program, which offers a robust set of technology-based services to help business and organization owners prevent workplace injuries, property damage, theft, and other losses.

The IoT technology solutions enable business leaders to monitor facilities, property, and employee safety to proactively manage risk. The Hanover i-on Sensor Program offers businesses solutions from expert partners for an array of risks, including:

– – Hanover i-on Sensors for Property – Undetected water leaks can quickly cause extensive damage. This program provides water sensors that leverage the power of technology to monitor water flow and alert our customers to leaks quickly, helping to minimize damage to property and business.
– – Hanover i-on Fleet Telematics – Understanding how drivers operate corporate vehicles can help prevent significant damage and eliminate the impact of shipping delays or repair costs from minor accidents. The telematics program leverages app-based technology to monitor drivers, helping combat distracted driving and identify risky driver behaviors to help prevent accidents and manage fleet safety.
– – Hanover i-on Workplace Ergonomics – Preventing workplace injuries keeps workers on the job and reduces exposure to workers’ compensation claims. Wearable sensors can help assess the risks of manual handling injuries to businesses and identify solutions using sensor technology and data insights.
– – Hanover i-on Heavy Equipment Tracking – Stolen or lost equipment can cause project delays and costly replacement expenses. The sensor-assisted asset tracking capability helps locate stolen heavy equipment so you can be sure these costly tools are in the right place at the right time

Manual handling injuries are a major cause of injury in the workplace, sidelining workers and production and resulting in workers’ comp claims. Many of those injuries are preventable. As part of the Hanover i-on Workplace Ergonomics Program, Risk Solutions has partnered with dorsaVi to help evaluate the risks of those injuries and find solutions using sensor technology and data insights with their ViSafe program.

The program takes advantage of state-of-the-art technology to help evaluate material handling situations “to be sure they aren’t an injury waiting to happen – and correct the situation if they are.”

ViSafe uses medical-grade wearable movement and muscle activity sensors, software and sophisticated algorithms, to provide objective and actionable data that profiles the movement risk of jobs, and the tasks within those jobs. Wearable sensors placed on low back and shoulders evaluate specific material handling tasks and send data to the myViSafe program, accessible on an iPhone or iPad. The program evaluates whether the employee is at risk of injury and recommends safer techniques to perform the task.

Data gathered and shared with employees at risk helps employers engage with staff on safe work practices, a firm step toward cooperation and improvement. Information gathered can also be used to evaluate tasks for return-to-work programs.

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Self-Insured Total Incurred Losses Increased 13.1% Last Year

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Workers’ compensation claim frequency among California’s private self-insured employers hit the highest level since 2007 last year as both medical-only and indemnity claim volume rose according to a California Workers’ Compensation Institute (CWCI) review of initial data from the state Office of Self-Insurance Plans (OSIP).

OSIP’s annual summary of private self-insured data, issued this July, is the first snapshot of California private, self-insured claims experience for cases reported in 2021.

It includes the total number of covered employees, medical-only and indemnity claim counts, and total paid and incurred losses on those claims through the end of the year. The latest summary reflects the experience of private self-insured employers who covered 2.39 million California employees last year (vs. 2.34 million in the 2020 initial report) and who reported 93,430 claims in 2021, 8% more than the 86,503 claims noted in the 2019 initial report.

The breakdown by claim type shows private self-insured employers reported 48,766 medical-only claims in 2021 (up 11.4% from 43,799 in 2020, the first year of the pandemic), though that was still 5.7% below the pre-pandemic total of 51,545 claims in 2019).

Indemnity claim volume, on the other hand, increased in both of the last two years, climbing from 34,307 claims in 2019 to 42,724 claims in 2020, then climbing to 44,664 claims last year. The latest claim count translates to an overall frequency rate of 3.92 claims (2.05 medical-only and 1.87 indemnity) per 100 private self-insured employees, the highest combined rate since 2007, with indemnity claim frequency reaching the highest level in at least 15 years.

The increase in claim volume and claim frequency helped drive up first report total paid and incurred losses.

The OSIP data show paid losses on the 2021 private self-insured claims through the fourth quarter totaled $314.8 million, 17.3% more than the first report total for 2020, as total paid indemnity (primarily temporary disability payments) climbed by $22.2 million (16.3%) to $158.7 million, and total paid medical increased by $24.3 million (18.4%) to $156.1 million.

Meanwhile, total incurred losses (paid benefits plus reserves for future payments) rose to $839.8 million, up $97.4 million, or 13.1% from the comparable 2020 figure, as total incurred indemnity at the first report increased by $36.8 million (12.0%) to $342.6 million and total incurred medical increased by $60.6 million (13.9%) to $497.2 million.

Aside from the higher claim volume, increases in the average paid and incurred losses at the first report also contributed to the growth in total paid and incurred losses, as both hit all-time highs in 2021, increasing to $3,370 and $8,988 respectively.

OSIP’s summary of private self-insured’s calendar year 2021 data, follows the December 2021 release of public self-insured claims data for fiscal year 2020/2021. OSIP private and public self-insured claim summaries from the past 20 years are posted at http://www.dir.ca.gov/SIP/StatewideTotals.html. CWCI members and subscribers may log on to the Communications section of the CWCI website www.cwci.org to view a summary Bulletin with more details, analyses, and graphics.

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Home Health Care Owner to Serve 18 Months for Kickback Scheme

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U.S. District Judge Troy L. Nunley sentenced Liana Karapetyan, 42, of El Dorado Hills, to 18 months in prison for one count of conspiracy to commit health care fraud and one count of conspiracy to pay and receive health care kickbacks.

According to court documents, Karapetyan and her husband, Akop Atoyan, owned and controlled home health care and hospice agencies in the greater Sacramento area: ANG Health Care Inc., Excel Home Healthcare Inc., and Excel Hospice Inc.

On behalf of the agencies, Karapetyan and Atoyan certified to Medicare that they would not pay kickbacks in exchange for Medicare beneficiary referrals to the agencies.

Despite their certifications, from at least July 2015 through April 2019, Karapetyan and Atoyan paid and directed others to pay kickbacks to multiple individuals for beneficiary referrals, including employees of health care facilities, as well as employees’ spouses.

The kickback recipients included John Eby, a registered nurse who worked for a hospital in Sacramento; Anita Vijay, the director of social services at a skilled nursing and assisted living facility in Sacramento; Jai Vijay, Anita Vijay’s husband; and Mariela Panganiban, the director of social services at a skilled nursing facility in Roseville.

In total, Karapetyan, Atoyan, and others caused the agencies to submit over 8,000 claims to Medicare for the cost of home health care and hospice services.

Based on those claims, Medicare paid the agencies approximately $31 million. Of that amount, Medicare paid the agencies at least $2 million for services purportedly provided to beneficiaries referred in exchange for kickbacks paid to, among others, Eby, Anita Vijay, Jai Vijay, and Panganiban. Because the agencies obtained the beneficiary referrals by paying kickbacks, the agencies should not have received any Medicare reimbursement.

This case was the product of an investigation by the Federal Bureau of Investigation and the Department of Health and Human Services’ Office of Inspector General. Assistant U.S. Attorney Matthew Thuesen prosecuted the case.

In separate cases, Atoyan, Eby, Jai Vijay, Anita Vijay, and Panganiban pleaded guilty for their roles in the kickback scheme.. As part of his guilty plea, Akop Atoyan agreed to pay $2,525,363 in restitution to the U.S. Department of Health and Human Services. He also agreed to forfeit that same amount to the United States.

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Court of Appeal Denies Injunction Classifying Lyft Drivers as Employees

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On March 12, 2020, John Rogers filed a putative class action in the Superior Court of the City and County of San Francisco alleging that Lyft misclassified its drivers as independent contractors, rather than as employees. The complaint asserted a single claim for failure to provide paid sick leave under Labor Code section 246. He then filed an ex parte application for an emergency preliminary injunction seeking to enjoin Lyft from classifying its drivers as independent contractors.

The hearing on the ex parte application was set for March 19, 2020. However, on that day, Lyft removed the case to federal court under the Class Action Fairness Act of 2005 (28 U.S.C. § 1332(d)). Plaintiffs submitted their emergency preliminary injunction request to the Federal District Court for the Northern District of California that same day. Lyft then filed a motion in the district court seeking to compel individual arbitration of Rogers’ claims.

The district court granted in part and denied in part Lyft’s motion to compel arbitration. (Rogers v. Lyft, Inc. (2020) 452 F.Supp. 3d 904, 909)  Finally, the court determined that it lacked jurisdiction as to plaintiffs’ claim for public injunctive relief (id. at p. 919), remanding the case back to the superior court to resolve whether the claim actually sought a private injunction, which would be subject to arbitration, or a public injunction, which would be exempt from arbitration.

Upon remand, plaintiffs filed another ex parte application for an emergency preliminary public injunction in the superior court, seeking to enjoin Lyft from “misclassifying its drivers in California as independent contractors and thereby denying these workers their rights under the Labor Code” and under two municipal ordinances pertaining to sick leave.

On remand the superior court granted Lyft’s motion to compel arbitration, and denied the plaintiff’s request for an injunction after concluding that the request was for a public injunction and that a denial of the injunction would not cause plaintiffs to suffer irreparable harm. Two days later, plaintiffs filed their notice of appeal of both of these rulings. The California Court of Appeal dismissed the appeal of both issues in the unpublished case of Rogers v Lyft – A160182 (July 2022).

While this appeal was pending, Proposition 22 passed on November 3, 2020, abrogating Assembly Bill No. 5. In doing so, Proposition 22 declared “app-based drivers” to be independent contractors – not employees – if the rideshare company (in this case, Lyft) provides those drivers with specific wage and hour protections. (See Bus. & Prof. Code. §§ 7451, 7453.) Proposition 22 took effect on December 16, 2020.

Proposition 22 was declared unconstitutional by a different trial court judge last year, but an appeal is pending.

In their opening brief, plaintiffs purport to appeal from the superior court’s “grant of Lyft’s Petition to Compel Arbitration,” which they assert “is appealable pursuant to [Code of Civil Procedure] section 1294 [subdivision](a).” The Court of appeal said that “this assertion is manifestly incorrect.”

Civil Code of Procedure section 1294, subdivision (a) provides: “An aggrieved party may appeal from . . . [a]n order dismissing or denyinga petition to compel arbitration.” (Italics added.) Here, the superior court granted Lyft’s petition to compel arbitration.

In any event, in their reply brief plaintiffs change course, expressly stating that they are not appealing from the order compelling arbitration. Accordingly, to the extent plaintiffs purport to appeal from the superior court’s order granting the motion to compel arbitration, the appeal on this issue was therefore dismissed.

In their opening brief, plaintiffs expressly waive any argument as to “whether an injunction remains appropriate following the passage of Proposition 22,” acknowledging that “a decision on the applicability of Proposition 22 would need to be addressed by the Superior Court in the first instance.” However, they assert that this case “presents a live case and controversy” because Lyft drivers would have received paid sick leave during the COVID-19 pandemic if the injunction had issued, and a reversal here would entitle them to this incidental relief. On this basis, they contend that they “still have a live claim for incidental relief.” Alternatively, they argue that this appeal should be heard because it “presents an important question of state law.”

Lyft contends that the only remaining issue in this appeal, the denial of plaintiffs’ request for an emergency preliminary public injunction ordering Lyft to reclassify its drivers as employees, should be dismissed as moot because plaintiffs “have expressly abandoned the preliminary injunction request that is the entire basis for this interlocutory appeal.”

The court of appeal agreed with Lyft that the appeal from the denial of the emergency preliminary injunction is moot and should be dismissed.

Shannon Liss-Riordan, an attorney for the Lyft drivers, said they are “disappointed in the decision and are considering our options, including petitioning the California Supreme Court for review.”

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CWCI Says SB 1127 Reduction of Claim Investigation Time is Unrealistic

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According to a new analysis by the California Workers’ Compensation Institute (CWCI), proposals to cut the amount of time California workers’ compensation claims administrators have to investigate work-related injuries and determine employer liability may be easier said than done, given existing statutory and regulatory time frames for the various steps within the process, many of which claims organizations do not control.

The length of a workers’ comp investigation varies depending on the type of injury reported, circumstances surrounding the injurious event, witness availability, the cooperation and availability of the parties involved, the number of issues and medical conditions asserted, and the availability of documentation. The CWCI study notes that reducing compensability determination time frames would make it hard to fully investigate claims, especially those that are litigated or denied.

Currently under consideration by the California Legislature, SB 1127 would reduce the investigation period for claims where workers are given a presumption of compensability to 75 days from the employer notification of injury, while the investigation period for other claims would remain at 90 days.

The CWCI analysis examines the underlying issues associated with this and other recent proposals to reduce claim investigation time frames and uses data from 459,195 non-COVID-19 claims and 17,135 COVID-19 claims to assess the impact of the proposals. Key findings include:

– – Accepted claims without litigation are the most frequent, least complex claims in the system. In 98.0 percent of these claims, compensability is determined within 90 days, while in 96.7 and 93.2 percent of these claims the decision is made within 60 and 30 days, respectively. When non-litigated and litigated non-COVID-19 claims are combined, more than 90 percent have a decision within 75 days.
– – Investigation periods are longer for litigated and denied claims and require significantly more time to gather reports and documentation from outside sources. For example, at 75 days, only 49.2 percent of litigated claims that are eventually denied have a compensability decision, strongly suggesting that under current rules and regulations, 75 days is an insufficient amount of time for claims administrators to obtain the medical and factual evidence required to make a compensability determination.
– – Under current law employers are already liable for up to $10,000 of medical treatment for a claimed injury during the investigation period, regardless of the ultimate compensability decision, so reducing that time frame would also reduce the amount of time that workers whose claims are eventually denied could receive that $10,000 worth of medical care.
– – Determining compensability is particularly challenging and time consuming for COVID-19 claims, especially those that are litigated. At the 45-day mark, 91.4 percent of accepted, non-litigated COVID-19 claims have a compensability decision, compared to 68.9 percent of the accepted COVID-19 claims that are litigated, a 22.5 percentage point difference. At 30 days, determinations have been reached on 85.5 percent of accepted, non-litigated COVID-19 claims, compared to 61.1 percent of the litigated COVID-19 claims that were accepted, a 24.4 percentage point differential.

The study’s findings show that reducing investigation timelines as proposed in prior and current legislation would create compensability determination thresholds that are unnecessary for accepted claims and unrealistic for litigated and denied claims.

CWCI has released its analysis of the impact of reducing compensability determinations in an Impact Analysis report that is available for free to the public.

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Amazon Dives into Medicine – Agrees to Acquire One Medical for $3.9B

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Amazon inaugurated its migration into the health care industry some time ago when it launched an online pharmacy and telemedicine service almost everywhere in the United States.

And then last year Amazon announced the expansion of Amazon Care, which dispenses “high-quality medical care and advice’ 24 hours a day, 365 days a year, with a goal of delivering the service through companies of all sizes to their employees nationwide.

Taking this initiative even further, this week Amazon and primary-care provider One Medical announced that they have entered into a definitive merger agreement under which Amazon will acquire One Medical.

One Medical says it is is a human-centered, technology-powered national primary care organization on a mission to make quality care more affordable, accessible, and enjoyable through a seamless combination of in-person, digital, and virtual care services that are convenient to where people work, shop, and live.

Amazon still makes most of its revenue from orders placed through its online stores, and most of its profit from its cloud computing arm. Both of those businesses were built almost entirely in house. But Amazon’s largest acquisitions show the company is willing to buy growth in markets that are adjacent to its core competencies.

Before One Medical, Amazon’s two largest acquisitions ever were its $13.7 billion purchase of grocery chain Whole Foods in 2017 and its $8.45 billion purchase of film and television distributor MGM Studios last year.

MGM and Whole Foods deals also tie back to the company’s Prime subscription offering, which gives it a steady stream of recurring revenue from millions of consumers and encourages loyalty. One Medical could follow that same template. Amazon has already added pharmacy benefits to Prime.

Amazon has dabbled in healthcare for several years. Amazon bought PillPack in 2018 for $750 million, then rolled out its own online pharmacy. It also launched Amazon Care, a service that has both telehealth and in-person offerings, first for its own employees before opening it up to other employers last year. The offering competes with One Medical.

Amazon will acquire One Medical for $18 per share in an all-cash transaction valued at approximately $3.9 billion, including One Medical’s net debt. Completion of the transaction is subject to customary closing conditions, including approval by One Medical’s shareholders and regulatory approval. On completion, Amir Dan Rubin will remain as CEO of One Medical.

One Medical is a U.S. national human-centered and technology-powered primary care organization with seamless digital health and inviting in-office care, convenient to where people work, shop, live, and click. One Medical’s vision is to delight millions of members with better health and better care while reducing costs, within a better team environment. One Medical’s mission is to transform health care for all through a human-centered, technology-powered model. Headquartered in San Francisco, 1Life Healthcare, Inc. is the administrative and managerial services company for the affiliated One Medical physician-owned professional corporations that deliver medical services in-office and virtually. 1Life and the One Medical entities do business under the “One Medical” brand.

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FBI Recovers Hospital’s Ransomware Payment to North Korean Hackers

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The Justice Department announced a complaint filed in the District of Kansas to forfeit cryptocurrency paid as ransom to North Korean hackers or otherwise used to launder such ransom payments. In May 2022, the FBI filed a sealed seizure warrant for the funds worth approximately half a million dollars. The seized funds include ransoms paid by health care providers in Kansas and Colorado.

“Thanks to rapid reporting and cooperation from a victim, the FBI and Justice Department prosecutors have disrupted the activities of a North Korean state-sponsored group deploying ransomware known as ‘Maui,’” said Deputy Attorney General Lisa O. Monacoat the International Conference on Cyber Security. “Not only did this allow us to recover their ransom payment as well as a ransom paid by previously unknown victims, but we were also able to identify a previously unidentified ransomware strain. The approach used in this case exemplifies how the Department of Justice is attacking malicious cyber activity from all angles to disrupt bad actors and prevent the next victim.”

According to court documents, in May 2021, North Korean hackers used a ransomware strain called Maui to encrypt the files and servers of a medical center in the District of Kansas. After more than a week of being unable to access encrypted servers, the Kansas hospital paid approximately $100,000 in Bitcoin to regain the use of their computers and equipment. Because the Kansas medical center notified the FBI and cooperated with law enforcement, the FBI was able to identify the never-before-seen North Korean ransomware and trace the cryptocurrency to China-based money launderers.

Then, as a result, in April 2022, the FBI observed an approximately $120,000 Bitcoin payment into one of the seized cryptocurrency accounts identified thanks to the cooperation of the Kansas hospital. The FBI’s investigation confirmed that a medical provider in Colorado had just paid a ransom after being hacked by actors using the same Maui ransomware strain. In May 2022, the FBI seized the contents of two cryptocurrency accounts that had received funds from the Kansas and Colorado health care providers. The District of Kansas then began proceedings to forfeit the hackers’ funds and return the stolen money to the victims.

“The FBI is dedicated to working with our federal and private sector partners to disrupt nation state actors who pose a critical cyber threat to the American people,” said FBI Cyber Division Assistant Director Bryan Vorndran. “Today’s success demonstrates the result of reporting to the FBI and our partners as early as possible when you are a victim of a cyber attack; this provides law enforcement with the ability to best assist the victim. We will continue to pursue these malicious cyber actors, such as these North Korean hackers, who threaten the American public regardless of where they may be and work to successfully retrieve ransom payments where possible.”

On July 6, 2022, based on information obtained during the Department’s investigation, the FBI, the Cybersecurity and Infrastructure Security Agency (CISA) and the Department of the Treasury issued a joint cybersecurity advisory regarding the North Korean threat to U.S. health care and public health sector organizations, which included indicators of compromise and mitigation advice.

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Trial Set in Insurance Commissioner Lara “Pay-to-Play” Controversy

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Consumer Watchdog filed its 834 page Opening Brief in a California Public Records Act (“CPRA”) lawsuit against Insurance Commissioner Ricardo Lara and the Department of Insurance. The CPRA suit alleges that Lara and the Department of Insurance failed to search for and produce records related to a pay-to-play scandal involving insurance companies with business pending before the agency.

The trial will in this case is scheduled to be held on September 2, 2022.

As explained in the Opening Brief, though Commissioner Lara had previously pledged not to accept insurance company contributions, in 2019 individuals linked to workers’ compensation insurer Applied Underwriters and another company, IHC, contributed $53,400 to Lara’s 2022 re-election campaign fund.  Some of the contributions were made in the name of relatives of insurance company executives, allegedly to hide their true source.

Shortly after, Applied’s president, Steven Menzies, requested that Commissioner Lara intervene in proceedings at the Department involving Applied.  Lara did so, overriding Administrative Law Judge orders in at least four proceedings.  Menzies also stood to gain if Commissioner Lara approved his purchase of Applied’s subsidiary, California Insurance Company (“CIC”).

In the wake of statewide news reports Commissioner Lara apologized and promised “transparency.”

Consumer Watchdog then filed two CPRA requests with the Department seeking communications and meeting records involving 13 named individuals and any other individuals “employed by or representing” the insurance companies involved in the scandal.

Several records the Department ultimately produced suggest that Menzies and others improperly discussed the sale of CIC with Commissioner Lara and Department staff simultaneous to campaign fundraising. The Department refused to produce other records and failed to provide an adequate explanation for withholding them.

Consumer Watchdog then filed a public records lawsuit (Consumer Watchdog v. Ricardo Lara et al. Case No. 20STCP00664) asking the court to require the Department to search for and produce all responsive records.

Following the filing of the lawsuit, Consumer Watchdog says that discovery responses from the Department demonstrated that the Department failed to search for records related to at least four individuals that the Department knew were “employed by or representing” Applied and IHC.

These individuals include a former New Mexico insurance regulator who left office following a different pay-to-play scandal, an insurance executive involved in the sale of CIC, and two former California legislators-turned lobbyists, Rusty Areias and Fabian Nunez.

As noted in the Opening Brief Consumer Watchdog “also learned through discovery that Respondents not only refused to search for responsive documents, but Respondents also withheld 96 communications and redacted six others, claiming they are “absolutely protected” under section 6254, subdivision (d), and Insurance Code section 735.5. Yet they “failed to meet their burden to establish that those provisions apply to the records.”

” Respondents have a duty under the CPRA to establish search protocols and adopt search terms adequate to identify responsive records. Respondents violated this duty. . . . An agency fails to conduct an adequate search when it fails to pursue leads in response to a records request that, if followed, could reasonably lead to further responsive records.”

Therefore, they request “that the Court order Respondents to (1) conduct a new search for and produce responsive records of meetings and communications with ‘any individuals employed by or representing’ the companies, and (2) produce the 96 withheld and six redacted records in an unredacted form.”

“Petitioner previously offered to settle the lawsuit if Respondents would simply conduct the required search. Respondents refused.”

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DWC Clarifies Provider Directory Requirements for MPNs

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The Division of Workers’ Compensation (DWC) has received questions regarding the types of entities or companies that can be included in a Medical Provider Network (MPN) provider directory.

The provider directory lists licensed physicians and ancillary providers of medical services (such as physical therapists) from which an injured worker covered by the MPN can freely select as their provider of medical treatment.  DWC would like to ensure that MPNs submitting provider listings to the Division for approval do not include non-compliant provider names.

Under current law, if an MPN submits a provider listing that contains the names of non-professional organizations, management services organizations, scheduling and coordinating companies, cost containment companies, or other non-provider entities, the DWC will disapprove the MPN submission.

For example, if an MPN submission includes an ancillary service provider, such as a non-professional corporation that either schedules or provides physical therapy, the submission will be denied since the entity cannot legally render professional services. See Business and Professions Code § 2406.

DWC will approve MPN submissions that contain the names of licensed providers (Labor Codes §§ 3209.3 and 3209.5), the names of professional corporations that can legally render medical services under the corporate name (Corporation Code § 13400 et seq.), or the names of licensed health care facilities (Health and Safety Code § 1250).

Upon submission of an MPN Plan to the DWC for review, MPNs are required to affirm under penalty of perjury that all of the physicians listed have a valid and current license number to practice in the state of California (California Code of Regulations, title 8, § 9767.3(c)(2)), and that all of the ancillary service providers listed have a current valid license number or certification to practice by the State of California and can provide the requested medical services or goods (California Code of Regulations, title 8, § 9767.3(c)(3)). These regulations make it clear that MPNs are responsible for credentialing ALL of the providers in their MPN provider listing.

Finally, if an MPN is uncertain about the legal status of an entity that they are thinking of listing, an available option is to list the names of each individually licensed provider rather than the questionable entity name. This ensures statutory and regulatory compliance and a robust MPN provider listing from which injured workers can freely choose their providers.

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Dozens Charged in $1.2 Billion Health Care Fraud Takedown

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The Department of Justice announced criminal charges against 36 defendants in 13 federal districts across the United States for more than $1.2 billion in alleged fraudulent telemedicine, cardiovascular and cancer genetic testing, and durable medical equipment (DME) schemes.

The nationwide coordinated law enforcement action includes criminal charges against a telemedicine company executive, owners and executives of clinical laboratories, durable medical equipment companies, marketing organizations, and medical professionals.

Additionally, the Centers for Medicare & Medicaid Services (CMS), Center for Program Integrity (CPI) announced today that it took adverse administrative actions against 52 providers involved in similar schemes. In connection with the enforcement action, the department seized over $8 million in cash, luxury vehicles, and other fraud proceeds.

The coordinated federal investigations primarily targeted alleged schemes involving the payment of illegal kickbacks and bribes by laboratory owners and operators in exchange for the referral of patients by medical professionals working with fraudulent telemedicine and digital medical technology companies. Telemedicine schemes account for more than $1 billion of the total alleged intended losses associated with the enforcement action.

These charges include some of the first prosecutions in the nation related to fraudulent cardiovascular genetic testing, a burgeoning scheme. As alleged in court documents, medical professionals made referrals for expensive and medically unnecessary cardiovascular and cancer genetic tests, as well as durable medical equipment. For example, cardiovascular genetic testing was not a method of diagnosing whether an individual presently had a cardiac condition and was not approved by Medicare for use as a general screening test for indicating an increased risk of developing cardiovascular conditions in the future.

One particular case charged involved the operator of several clinical laboratories, who was charged in connection with a scheme to pay over $16 million in kickbacks to marketers who, in turn, paid kickbacks to telemedicine companies and call centers in exchange for doctors’ orders. As alleged in court documents, orders for cardiovascular and cancer genetic testing were used by the defendant and others to submit over $174 million in false and fraudulent claims to Medicare – but the results of the testing were not used in treatment of patients. The defendant allegedly laundered the proceeds of the fraudulent scheme through a complex network of bank accounts and entities, including to purchase luxury vehicles, a yacht, and real estate. The indictment seeks forfeiture of over $7 million in United States currency, three properties, the yacht, and a Tesla and other vehicles.  

Some of the defendants charged in this enforcement action allegedly controlled a telemarketing network, based both domestically and overseas, that lured thousands of elderly and/or disabled patients into a criminal scheme. The owners of marketing organizations allegedly had telemarketers use deceptive techniques to induce Medicare beneficiaries to agree to cardiovascular genetic testing, and other genetic testing and equipment.

The charges allege that the telemedicine companies arranged for medical professionals to order these expensive genetic tests and durable medical equipment regardless of whether the patients needed them, and that they were ordered without any patient interaction or with only a brief telephonic conversation. Often, these test results or durable medical equipment were not provided to the patients or were worthless to their primary care doctors.

This announcement builds on prior telemedicine enforcement actions involving over $8 billion in fraud, including 2019’s Operation Brace Yourself, 2019’s Operation Double Helix, 2020’s Operation Rubber Stamp, and the telemedicine component of the 2021 National Health Care Fraud Enforcement Action. Specifically, the Operation Brace Yourself Telemedicine and Durable Medical Equipment Takedown alone resulted in an estimated cost avoidance of more than $1.9 billion in the amount paid by Medicare for orthotic braces in the 20 months following that enforcement action.

Prior to the charges announced as part of today’s nationwide enforcement action and since its inception in March 2007, the Health Care Fraud Strike Force, which maintains 16 strike forces operating in 27 districts, has charged more than 5,000 defendants who collectively billed federal health care programs and private insurers approximately $24.7 billion.

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