Justice Division is charging 78 individuals with $2.5 billion in healthcare fraud

US Attorney General Merrick Garland speaks in Washington, DC on June 22, 2023

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The Justice Department announced on Wednesday that it recently indicted 78 people on $2.5 billion in healthcare fraud and opioid abuse.

The defendants are said to have defrauded programs that care for the elderly and disabled and, in some cases, used the ill-gotten gains to buy exotic cars, jewelry and yachts, according to the Justice Department.

Defendants include 11 defendants accused of filing $2 billion in fraudulent claims via telemedicine, and 10 defendants charged in connection with fraudulent prescription drug claims.

Overall, prosecutors in 16 states have filed indictments against individuals in cases filed or cleared under the coordinated crackdown in the past two weeks.

Defendants include “physicians and other licensed medical professionals who lined their own pockets, including physicians who allegedly put their patients at risk by illegally giving them opioids they didn’t need,” the DOJ said in a press release.

Attorney General Merrick Garland said in a statement: “These enforcement actions, including against one of the largest healthcare fraud cases ever prosecuted by the Department of Justice, represent our increased efforts to fight fraud and prosecute those who benefit from it.”

In the plan, led by Garland, executives at alleged software and services companies filed $1.9 billion in fraudulent claims with Medicare for items that were non-reimbursable, according to the DOJ.

The defendants in this case are Brett Blackman and Gregory Schreck of Johnson County, Kansas, and Gary Cox of Maricopa County, Arizona, who are alleged to have used mass telemarketing operations to sell elderly and disabled people expensive and unnecessary medical equipment and devices Prescriptions for sale in the US District Court for the Southern District of Florida.

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The trio allegedly ran a software platform called DMERx, which generated fake and fraudulent medical prescriptions in exchange for illegal kickbacks and bribes.

Cox was the CEO of the company that originally ran the software behind the scam scheme. He then sold the platform to a company where Black was CEO and Schreck was vice president of business development.

According to the indictment, the defendants allegedly received payment for forwarding fraudulent doctor’s orders and prescriptions to pharmacies, suppliers and telemarketers. The orders and prescriptions alleged that the doctors actually examined or treated the patients, when in fact the doctors were paid by alleged telemedicine companies to sign the documents, the indictment said.

In many cases, the doctors only spoke to the patients briefly on the phone or did not interact at all, according to the indictment. To obfuscate the plan, the defendants allegedly removed references to telemedicine in the orders.

In another case, the DOJ also indicted Steven Diamantstein, owner of Scripts Wholesale Inc., on a $150 million attempted fraud involving HIV drugs.

Diamantstein, who lives in Brooklyn, New York, allegedly bought HIV drugs at a significant discount from people who obtained the pills illegally by having patients pay cash and repackaging them for sale.

Diamantstein then falsely claimed his company obtained the drugs legally, according to an indictment in the US District Court in New Jersey.

The DOJ also filed indictments against 24 physicians and healthcare professionals in counts involving $150 million in false billing related to the illegal distribution of opioids and lab test fraud.

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