Telehealth Company Owners Charged in $64M Fraud Scheme

Stephen Luke and David Laughlin, the owners of telemedicine company RediDoc LLC, pleaded guilty to violating the federal Anti-Kickback Statute and committing healthcare fraud in a federal court.

RediDoc is a purported telemedicine company from Phoenix, Arizona, operated by Luke and Laughlin, according to the Department of Justice. Between September 2017 and December 2019, they submitted false claims to federal healthcare benefit programs, violating the Anti-Kickback Statute.

This involved bribing doctors and soliciting from marketing companies, pharmacies, and durable medical equipment (DME) providers, according to the government.

Pharmacies and DME providers paid bribes to marketing companies for drug prescriptions and orders for DME from doctors. The marketing companies provided RediDoc with the information of Medicare and TRICARE beneficiaries, along with pre-filled prescriptions and DME orders, the government said.

RediDoc then gave the beneficiary information and pre-filled prescriptions and DME orders to doctors they had bribed. The doctors often approved medically unnecessary prescriptions and orders without having any contact with the beneficiary.

The reimbursement that doctors would receive from Medicare and TRICARE played a role in how they selected certain drugs. 

RediDoc then billed the pharmacies and DME providers, who sent a partial reimbursement to marketing companies, who in turn shared the funds with RediDoc.  Luke and Laughlin received approximately $32 million in reimbursement from marketing companies.

They also admitted that their scheme resulted in fraudulent claims — totaling more than $64 million — being submitted to healthcare benefit programs.

The two RediDoc leaders could face severe penalties, including five years for the kickback conspiracy and 10 years for healthcare fraud. In addition to this, they could face fines, restitution, and forfeiture. Luke and Laughlin will receive their sentence on Oct. 11.

The Justice Department has increasingly been cracking down on cases of telehealth-related fraud, waste, and abuse.

Last month, an orthopedic surgeon Elemer Raffai, MD, was indicted in a telemedicine fraud scheme that involved the submission of false and fraudulent claims to Medicare. Per the indictment, Raffai took part in a fraud scheme that involved him signing prescriptions and order forms through alleged telemedicine services to obtain durable medical equipment that was not medically necessary.

In December 2021, four people were charged for their involvement in a telemedicine fraud scheme that swindled public and private payers out of $37 million.

In another instance from last September, a man in Florida pleaded guilty to taking advantage of telehealth policies directed toward increasing care access for Medicare beneficiaries. In this case, Leonel Palatnik, the co-owner of Panda Conservation Group, illegally paid the owner of 1523 Holdings in exchange for directing telehealth providers to refer Medicare patients to Panda laboratory facilities for genetic testing.