Florida Companies Named In Largest Medicare Fraud Scam In History

ACROSS FLORIDA -- Florida companies are among 24 defendants named in the largest Medicare fraud scheme in history.

United States Attorney Sherri A. Lydon announced this week that the government has uncovered an elaborate conspiracy to sell unnecessary orthopedic braces to hundreds of thousands of Medicare recipients, resulting in a $1.2 billion loss to Medicare.

In what's being called Operation Brace Yourself, the FBI, the Department of Health and Human Services Office and the IRS Criminal Investigation Division executed more than 80 search warrants in 17 federal districts, charging 24 defendants so far.

The defendants include owners and managers of six tele-medicine companies, owners of dozens of durable medical equipment companies and three licensed medical professionals.

“The same spoon that serves indictments on drug dealers, felons in possession of firearms and corrupt officials will also feed those companies and individuals who engage in Medicare fraud," said Lydon. "White collar crime is not victimless. All taxpayers will endure the rising cost of health care premiums and out-of-pocket costs as a result of fraud on our Medicare system."

The charges target all parties involved in the health care scheme, from the initial kickback through the fraudulent billing of Medicare.

The scheme began with kickbacks by durable medical equipment companies to an offshore call center. The call center then purchased advertisements that targeted Medicare beneficiaries. The calls were routed overseas and to call centers run by members of the conspiracy. The call centers “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” braces, regardless of medical necessity. The caller was then routed to medical professionals working with fraudulent tele-medicine companies for back, shoulder, wrist and knee braces that were often medically unnecessary.

Medical equipment companies would get $500 to $900 per brace from Medicare and would pay kickbacks of nearly $300 per brace.

According to the U.S. Attorney, certain members of the conspiracy controlled an international telemarketing network that lured hundreds of thousands of elderly or disabled patients inton the criminal scheme that crossed borders. They paid doctors to prescribe durable medical equipment either without any patient interaction or with only a brief telephone conversation with patients.

The physicians’ “prescriptions” were then sent back to the call center, which provided the “prescription” and other information to the durable medical equipment companies. Two drop-ship companies would then ship low-cost Chinese-made braces to the Medicare patients, and the equipment companies would fraudulently bill Medicare.

The proceeds of the scheme were laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate, according to the U.S. Attorney.

“Health care fraud schemes, such as the massive, sweeping operations charged here, divert desperately needed funding from government health programs and the people they serve,” said Derrick Jackson, Special Agent in Charge, Department of Health and Human Services Office of Inspector General.

“Working closely with our law enforcement partners, we are dedicated to disrupting schemes of health care organization owners, managers, licensed medical professionals and others intent on enriching themselves at the expense of U.S. taxpayers. All contemplating such ill-gotten gains should expect aggressive investigation and prosecution," said Jackson.

“The American tax system is designed to provide vital government services to our citizens. It is not a slush fund for thieves and fraudsters,” said IRS-CID Special Agent in Charge Matthew D. Line. “IRS Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of funds. We stand committed with our partners to pursue and prosecute those involved to the fullest extent of the law.”

Among the people charged were three men from South Florida: Creaghan Harry, 51, of Highland Beach; Lester Stockett, 51, of Deefield Beach; and Elliot Loewenstern, 56, of Boca Raton who ran call centers and tele-medicine companies owner.

They were arrested for their part in a $454 million illegal health care kickback and money laundering scheme.

More than 100 equipment companies will have their Medicare payments cut off as part of the operation, according to the FBI.