DOJ Targets COVID-19 Test Fraud
While federal authorities are continuing to aggressively investigate and prosecute Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) fraud—which has been called the “biggest fraud in a generation”—this isn’t the only form of COVID-19 fraud that remains on the government’s radar. The U.S. Department of Justice (DOJ) is also targeting physicians, marketers, and others who fraudulently billed the government for COVID-19 tests during the pandemic.
As Bloomberg Law recently reported, the DOJ is investigating cases in which “fraudsters” are suspected of using patients’ Medicare ID numbers to order COVID-19 tests without their consent—and in many cases without their knowledge. In some cases, according to Bloomberg, these individuals also ordered tests for patients who were deceased. According to the article:
“Federal investigators are just beginning to uncover the breadth of the fraud, which involved hundreds of thousands of tests. Seniors and their families in at least 10 states have been targeted.”
The article cites a recent case in which a physician and marketer were charged with obtaining $8.4 million from Medicare after illegally purchasing patients’ Medicare ID numbers, and goes on to state that the DOJ, “along with the Inspector General of the Department of Health and Human Services, is investigating other reports of coronavirus tests being sent to recipients who never ordered them.”
Since Medicare now only covers at-home COVID-19 tests when healthcare providers order them, Bloomberg Law reports that “[t]he onslaught of unwanted tests is expected to wane.” Nonetheless, it is clear that the DOJ and Department of Health and Human Services (DHHS) are continuing to target multiple forms of pandemic-related fraud in 2023, and those who have fraudulently ordered tests in the past remain at high risk for facing federal scrutiny.
DOJ: “First-of-Their-Kind” Charges Target Medicare Fraud Involving OTC COVID-19 Tests
In a press release announcing the alleged $8.4 million fraud discussed in the Bloomberg Law article, the DOJ describes the case as involving “first-of-their-kind charges against suppliers of COVID-19 over-the-counter tests, which Medicare began to cover in April 2022 for beneficiaries who requested them.” The press release, issued on April 20, 2023, also highlights other law enforcement efforts targeting alleged COVID-19 fraud scams with total false billings exceeding $490 million.
Bloomberg Law has published the Indictment against the physician and marketer in Florida. The Indictment sheds additional light on the types of allegations the DOJ is targeting, as well as the federal statutes it is using to pursue prosecution. Some examples of key allegations in the Indictment include:
- The defendants knowingly and willfully conspired to “defraud the United States out of money and property and by impeding . . . the lawful function of HHS, through its agency CMS, in the administration of Medicare by deceit, craft, and trickery.”
- The defendants knowingly and willfully conspired to “purchase, sell, and distribute, and arrange for the purchase, sale, and distribution, of Medicare beneficiary identification numbers, that is, HICNs and MBIs.”
- The purpose of the defendants’ conspiracy was “to unlawfully enrich themselves by, among other things . . . submitting and causing the submission of false and fraudulent claims to Medicare for over-the-counter COVID-19 tests that were not requested by beneficiaries and ineligible for Medicare reimbursement.”
- It was part of the conspiracy that the defendants would pay a marketing company “approximately $85,000 in exchange for Medicare beneficiary identification numbers, including HICNs and MBIs, and other information, for thousands of Medicare beneficiaries throughout the United States.
- It was part of the conspiracy that the defendants “would cause over-the-counter COVID-19 tests to be shipped to those Medicare beneficiaries whose Medicare beneficiary identification numbers had been purchased, regardless of whether the Medicare beneficiaries had requested or needed the tests . . . [and] submit more than $8.4 million in false and fraudulent claims to Medicare . . . .”
The Indictment alleges violations of multiple federal statutes, and seeks forfeiture of the defendants’ alleged ill-gotten gains (or any substitute property). The charges contained in the Indictment include:
- Anti-Kickback Statute Violations (42 U.S.C. Section 1320a-7b) – The Indictment alleges violations of 42 U.S.C. Section 1320a-7b(b)(4). This is a provision of the federal Anti-Kickback Statute that makes it a federal offense to “knowingly and willfully purchase, sell or distribute, or arrange for the purchase, sale, or distribution of a beneficiary identification number or unique health identifier for a health care provider.”
- Conspiracy (18 U.S.C. Section 371) – The indictment also alleges violations of the federal conspiracy statute, 18 U.S.C. Section 371. Proving a conspiracy does not require proof of a successful fraudulent scheme (although the Indictment alleges that the defendants received $2.6 million in fraudulent payments from Medicare), but instead requires proof that, “two or more persons conspire[d] either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons d[id] any act to effect the object of the conspiracy.”
In addition to forfeiture, violations of 42 U.S.C. Section 1320a-7b(b)(4) can carry up to a $500,000 for individuals ($1 million for corporations) and up to 10 years of federal imprisonment. Conspiracy convictions under 18 U.S.C. Section 371 carry statutory fines and up to five years of prison time.
Other Potential Charges in Medicare Fraud Cases Involving Over-the-Counter COVID-19 Tests
Along with Anti-Kickback Statute and conspiracy charges, purchasing Medicare beneficiaries’ identification numbers and fraudulently billing Medicare for over-the-counter COVID-19 tests could potentially trigger a wide range of other federal charges as well. It is unclear why the DOJ limited the charges in the case discussed above to those filed under 42 U.S.C. Section 1320a-7b and 18 U.S.C. Section 371. Some examples of other federal crimes that may be implicated in these cases (and that have been prosecuted in other similar types of Medicare fraud cases) include:
- Aggravated Identity Theft (18 U.S.C. Section 1028A) – The DOJ can pursue aggravated identity theft charges against a person who “knowingly transfers, possesses, or uses, without lawful authority, a means of identification of another person” in connection with another federal felony. Aggravated identity theft carries up to two years of federal imprisonment.
- False Claims Act Violations (18 U.S.C. Section 287) – The False Claims Act prohibits the submission of any “false, fictitious, or fraudulent” claim for payment by the federal government or any government agency. Criminal violations of the False Claims Act carry statutory fines and up to five years of federal imprisonment.
- Government Fraud (18 U.S.C. Section 1001) – Section 1001 is the general federal government fraud statute. It imposes statutory fines and up to five years of imprisonment for anyone who “makes any materially false, fictitious, or fraudulent statement or representation” to a federal officer, employee, or agency.
- Healthcare Fraud (18 U.S.C. Section 1347) – Section 1347 makes it a federal offense to knowingly and willfully execute (or attempt to execute) “a scheme or artifice . . . to defraud any health care benefit program.” Violations of Section 1347 carry statutory fines and up to 10 years of federal imprisonment.
- Wire Fraud (18 U.S.C. Section 1343) – The federal wire fraud statute is extremely broad, and it facilitates prosecution in a wide range of scenarios. Under Section 1343, anyone who transmits any communications or information by wire (i.e., over the Internet) “having devised or intending to devise any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent pretenses, representations, or promises,” can face statutory fines and up to 20 years behind bars.
Even these are just examples of the charges prosecutors can pursue in Medicare fraud cases. Depending on the circumstances involved, physicians, marketers, and other individuals and entities targeted in these cases could potentially face charges for tax evasion (26 U.S.C. Section 7201), money laundering (18 U.S.C. Section 1956), and other federal crimes as well. Collectively, these charges can expose defendants to millions of dollars in fines and forfeiture liability—in addition to decades of federal imprisonment.
Are You At Risk for Facing a COVID-19 Test Fraud Investigation?
Are you at risk of facing a COVID-19 test fraud investigation? While the DOJ may be primarily targeting “fraudsters” that purchased Medicare beneficiaries’ ID numbers in order to fraudulently bill for unnecessary over-the-counter tests, legitimate healthcare providers that have sought reimbursement for a large volume of tests may face scrutiny as well. Due to the breadth of fraud committed during the pandemic, the DOJ and other federal authorities are casting a wide net, and they are relying on various indicators to identify potential targets for criminal fraud investigations. Allegations of COVID-19 test fraud may lead to other fraud allegations as well (i.e., PPP and EIDL fraud), and targeted entities and individuals may quickly find themselves facing significant criminal exposure.
Contact the Federal Healthcare Defense Lawyers at Oberheiden P.C.
The federal healthcare defense lawyers at Oberheiden P.C. represent physicians, marketers, and other clients in all types of pandemic-related fraud investigations and prosecutions. If you are facing scrutiny or charges in relation to alleged COVID-19 test fraud, call 888-680-1745 or contact us online for a confidential consultation.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.