Security & Fraud

Medical Equipment Cos Charged In $1.2B Healthcare Fraud

U.S. authorities announced that they have charged a number of individuals in connection with one of the biggest healthcare frauds ever prosecuted in the nation.

The Medicare fraud case has accused owners of durable medical equipment (DME) companies of offering kickbacks for referrals made by medical professionals working with fraudulent telemedicine companies, selling unnecessary orthotic braces to hundreds of thousands of elderly and disabled patients. The fraud, which resulted in more than $1.2 billion in losses, also included call centers in the Philippines and Latin America, with the money generated from the scheme, then laundered through offshore shell companies.

In a joint statement from several U.S. attorneys, the FBI, Department of Health and Human Services’ (HHS) Office of Inspector General, and IRS, it was revealed that charges have been brought against 24 defendants, including the CEOs, COOs and others associated with five telemedicine companies, the owners of dozens of DMEs and three licensed medical professionals.

Medicare’s anti-fraud unit announced that it took adverse administrative action against 130 DME companies that submitted over $1.7 billion in claims, and were paid over $900 million. Charges against the various defendants were brought in California, Florida, New Jersey, Pennsylvania, South Carolina and Texas.

“The breadth of this nationwide conspiracy should be frightening to all who rely on some form of healthcare,” said IRS CI Chief Don Fort. “The conspiracy described in this indictment was not perpetrated by one individual. Rather, it details broad corruption, massive amounts of greed and systemic flaws in our healthcare system that were exploited by the defendants. We all suffer when schemes like this go undiscovered, and I’m proud of the work our agents did in working with our partners to uncover this complex scheme.”

The largest scheme was a $454 million fraud carried out by Florida residents Creaghan Harry, Lester Stockett and Elliot Loewenstern, respectively the owner, chief executive and marketing vice president of call centers and telemedicine companies. In addition, there were charges filed against New Jersey residents Neal Williamsky and Nadia Levit, who own approximately 25 DME companies, and participated in a separate $150 million scheme.


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