Top Healthcare Fraud, Waste, and Abuse Takedowns of the Year

Telemedicine exploited in $784M fraud scheme

A telemedicine company owner was behind one of the largest Medicare fraud schemes ever, according to an August 2021 announcement from the DoJ.

A federal grand jury in Newark, New Jersey returned a superseding indictment this August charging Creaghan Harry, 53, of Highland Beach, Florida with organizing a healthcare fraud and illegal kickback scheme through multiple telemedicine companies. The scheme resulted in over $784 million in false and fraudulent claims to Medicare.

DoJ reported that Harry and co-conspirators allegedly solicited illegal kickbacks and bribes from durable medical equipment (DME) suppliers and marketers for orders of DME braces and medications. Harry’s telemedicine companies then provided orders to DME suppliers that fraudulently billed Medicare, which ended up paying more than $247 million for the claims, according to DoJ.

Harry was also accused of falsely representing the telemedicine companies, saying they had received “about $10 million per year” from fees paid by patients for telemedicine services. DoJ said the revenue was actually from the illegal kickbacks and bribes, some of which were paid to shell companies in other companies.

Pharmacist, marketer plead guilty to $180M healthcare fraud scheme

In August 2021, a Mississippi pharmacist and a Louisiana marketer pleaded guilty for their roles in a $180 million healthcare fraud scheme.

DoJ announced earlier this year that Mitchell “Chad” Barrett, 54, formerly of Mississippi, and Thomas “Tommy” Wilburn Shoemaker, 57, of Rayville, Louisiana, collaborated to defraud TRICARE and private payers by paying kickbacks to distributors of medically unnecessary prescriptions.

According to the announcement, Barrett adjusted prescription formulas to secure higher reimbursement despite no evidence the adjusted formulas would boost efficacy. Barrett also paid recruiters commission based on reimbursements paid by pharmacy benefit managers and payers in exchange for getting prescriptions for high-margin compounded medications.

Shoemaker acted as a marketer for Barrett’s compound pharmacies, allowing the pharmacies to use his TRICARE insurance to adjust prescription formulas as part of the healthcare fraud scheme. He also recruited physicians to prescribe the high-margin compound medications and obtained fraudulent prescriptions using personal information from his acquaintances associated with the military.

Shoemaker was sentenced to 30 months in prison, DoJ later reported.

Barrett, who pleaded guilty to conspiracy to engage in monetary transactions in criminally derived property, faces a maximum penalty of 10 years in prison. 

CEO gets 15 years in prison for fraud, opioid case

This year, the chief executive officer (CEO) of a group of pain clinics in Michigan and Ohio was sentenced to 15 years in prison for his role in a healthcare fraud scheme involving opioid distribution and money laundering.

DoJ reported in March that Mashiyat Rashid, 40, of West Bloomfield, Michigan, and former CEO of the Tri-County Wellness Group crafted and approved a corporate policy to “administer unnecessary back injections to patients in exchange for prescriptions of over 6.6 million doses of medically unnecessary opioids.”

Rashid had pleaded guilty in 2018 to one count of conspiracy to commit healthcare and wire fraud and one count of money laundering. The scheme also involved others, including four physicians who have also been convicted for their roles in the healthcare fraud, waste, and abuse case.

DoJ said “evidence at trial showed that the Tri-County clinics valued making money over patient care,” with court documents showing some patients actually experienced more pain from the injections and they would oftentimes scream during treatment. Other patients developed adverse conditions, including open holes in their backs.

The trial exposed the scheme as targeting Medicare beneficiaries. Defendants would recruit patients from homeless shelters and soup kitchens.

Hospice, home health owner sentenced in $150M scheme

Yet another healthcare executive is in prison over a healthcare fraud scheme and money laundering scheme. This time, the former CEO of a Texas-based group of hospice and home health facilities received 15 years in prison for falsely telling thousands of patients with long-term, incurable illnesses that they were to die within the next six months in order to enroll them in hospice programs.

The healthcare fraud and money laundering scheme resulted in the submission of over $150 million in false and fraudulent claims between 2009 and 2018, according to law enforcement officials.

Henry McInnis, 50, of Harlingen, Texas, was charged with ordering employees of the group called Merida Group to falsified medical records to make it appear as if patients were terminally ill and to admit unqualified patients to programs. Under McInnis’ direction, some patients were also kept in programs for longer periods of time despite not needing the services.

Employees were reportedly fired and reprimanded for refusing to participate in the healthcare scheme.

Later in 2021, Jose Garza, 44, of Harlingen, the former operations manager for the Merida Group, was sentenced to 27 months in prison for his role in the healthcare fraud scheme.

13 plead guilty for $126M false, fraudulent claims to OWCP, TRICARE

A total of 13 defendants, including three compounding pharmacy owners, three physicians, two pharmacists, and three patient recruiters, pleaded guilty in October 2021 for their involvement in a multi-state healthcare fraud scheme, the DoJ reported.

According to an official announcement, the defendants submitted false and fraudulent claims to the Office of Workers’ Compensation Programs (OWCP) and TRICARE for compounded and other drugs prescribed to injured federal workers and members of the armed forces.

The defendants also pleaded guilty to paying kickbacks to patient recruiters and physicians who prescribed the drugs. The drugs were prescribed based on reimbursement rates, rather than medical necessity. Then, patients were mailed the prescription drugs even though many did not request, want, or need them, DoJ stated.

The 13 defendants are scheduled for sentencing in February 2022.

Jury returns indictment in $100M COVID-19 healthcare fraud case

In November 2021, a federal grand jury returned an indictment charging the owner of diagnostic testing laboratories in Arkansas in a healthcare fraud case involving over $100 million in false billing for COVID-19 testing and other clinical laboratory services.

The DoJ announced that Billy Joe Taylor, 42, of Lavaca, participated in the healthcare fraud scheme between February 2017 and May 2021. Taylor was allegedly connected with diagnostic testing, including urine drug testing and tests for respiratory illnesses during the COVID-19 pandemic, which has been deemed medically unnecessary, was not ordered by medical providers, and/or not provided as represented. Taylor then billed Medicare for the tests.

As part of the scheme, Taylor reportedly acquired medical and private personal information on Medicare beneficiaries to repeatedly send claims to Medicare for the diagnostic tests. Revenue from the false and fraudulent claims was then used to fund a “lavish lifestyle,” which included luxury cars, jewelry, real estate, and expensive guitars, DoJ stated.

Taylor faces 16 counts of healthcare fraud and one count of engaging in a monetary transaction in criminally-derived property. Previously, Taylor was charged by a criminal complaint in May 2021.

In December 2021, a judge revoked Taylor’s $100,000 bond after accusations that Taylor violated the terms of his release.