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Dr. Nick Oberheiden

Lynette Byrd
Former Assistant
U.S. Attorney

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DME Fraud Defense & Compliance

The 5 Pitfalls of DME

A True Example

Thursday morning 8am. A DME owner (“John”) arrives at his office. Approximately 20 police cars are in the parking lot. Special agents from the FBI, the Office of Inspector General, the Department of Justice approach arriving John to inform him that they have a federal Search and Seizure Warrant to raid his office and his house. He learns that there is probable cause that the DME business is engaged in healthcare fraud, Medicare fraud, mail fraud, wire fraud, and kickbacks. John is under shock. He is speechless. How could this happen? What in the world did he do wrong? He is a good man, has never been accused of anything illegal, he doesn’t even have a traffic ticket. John would never risk his freedom for doing anything wrong—no matter how lucrative or tempting the opportunity is.

About Federal Lawyer Dr. Nick Oberheiden

Attorney Dr. Nick Oberheiden is well familiar with scenarios just described. Nick has represented hundreds and hundreds of medical providers, healthcare business owners, and DME businesses in high-stake civil and criminal fraud investigations involving the Centers of Medicaid and Medicare (CMS), the Federal Bureau of Investigation (FBI), the U.S. Department of Health and Human Services (HHS), the Office of Inspector General (OIG), local U.S. Attorney’s Offices, and the U.S. Justice Department (DOJ).

It is this frontline experience that helps Nick to educate and counsel his corporate healthcare clients to avoid the mistakes made by others. This experience is unique. Rather than learning about healthcare rules from books and seminars, Nick is a hands-on federal defense attorney who is called to rescue doctors, entrepreneurs, Medicare providers, and increasingly DME companies when being subjected to federal search warrants, raids, arrests, audits, ZPIC audits, and FBI target letters.

From these healthcare fraud investigations, Nick has seen how little mistakes, ignorance of rules, and lack of compliance have prompted highly invasive federal fraud investigations. Applying this front-line experience—and adding the experience of lawyers previously in charge of healthcare fraud prosecutions— is what makes Oberheiden PC’s advice so reliable, informed, and unusually practical.

Why Is DME so Heavily Enforced?

DME is one of the hottest items in healthcare. Ever since Medicare relieved, business entrepreneurs have either entered the DME bus. While the

Purpose of this article, co-written by former Justice Department officials and former healthcare fraud prosecutors, is to outline DME business owners and physicians.

Medical Marketing

Many home health agencies rely on marketing arrangements that violate federal law. Everyone understands that business development constitutes an integral part of any business’s ability to survive. However, unlike the rules that apply to most other industries, the restrictions governing the health care industry are complex and unforgiving. For example, simply choosing whether to designate a marketer as a W2 employee or a 1099 contractor can determine whether a home health agency is in violation of the federal Anti-Kickback Statute. The Anti-Kickback Statute prohibits certain compensation structures for referring or directing federally-funded patients. Commissions, percentage-based compensation, and individual rewards are generally prohibited.  Another common issue is that many home health agencies do not have written contracts with their marketers – a practice which federal authorities consider to be non-transparent. To avoid scrutiny in this area, structuring Medicare-compliant marketing compensation arrangements should be a centerpiece of compliance.

Buying Medicare Leads

Besides traditional marketing, more and more healthcare businesses have begun to buy leads from online companies. These lead generating businesses have built large databases of patients that may qualify for DME based on records showing past surgeries, pain management visits, and other indications. Potential buyers receive typically a patient’s name, phone number, and other helpful information to contact the patient and verify the lead. As the DME market is sky-rocking, a single DME lead can cost up to $ 500 in some areas.

Buying leads is dangerous business. The U.S. Justice Department has an extensive track record when it comes to criminally prosecuting owners of lead agencies and even attorneys when it comes to making available information of, for example, personal injury clients in need for medical services. The problem is twofold. The smaller problem is HIPAA. State and federal law protects sensitive patient information from unwanted disclosure. “Trading” such information would require, at an absolute minimum, the patient’s informed consent and written agreements to cover the company’s bases. The bigger problem with buying or selling leads is that the Centers for Medicaid and Medicare and various U.S. Attorney’s Offices consider Medicare purchases or Tricare purchases violations of the federal Anti-Kickback Statute. If your business is purchasing Medicare leads, or considering doing so, you should contact Dr. Nick Oberheiden to make sure that your arrangement does not fall within the Anti-Kickback Statute or is remedied by appropriate healthcare compliance contracts.

Medical Necessity

Success in healthcare has to start and end with improving a patient’s condition. Marketing may be an important element of running a DME business, but at what point does marketing cross the line to patient brokering, patient solicitation, and mere talking a patient into something that patient de facto does not need? Does the patient really need the wheelchair? What should the patient do if she already has a back brace?

Almost all DME businesses focus too little on the most important aspect: clinical necessity. Naturally, DME owners will say that they leave the medical necessity decision to a doctor. DME companies just ship the order. This view, in our opinion, is too short-sighted. The Justice Department looks at the entire process, not just a doctor. Take the recent prosecutions of compound pharmacies. Yes, the pharmacy owners took the position that they just filled the order. It was the ordering physician and the pharmacist who authorized the prescription. Nonetheless, the doctor, the pharmacy owner, and the pharmacist got charged. Why? Because the government investigates healthcare fraud as a conspiracy. Under the federal conspiracy rules everyone contributing to a scheme can be criminally liable. Projected to DME, it would be a fatal mistake to hide behind the doctor if the DME is in fact not medically appropriate for that patient.

Dr. Nick Oberheiden has developed proven mechanisms to protect his clients from such inroads and allegations. Importantly, you must realize that healthcare enforcement is different compared to most other cases. Experience in counsel matters. Don’t be John in the example above. Don’t let others cause you to lose your license, your reputation, or your freedom. Call Nick.


Telemedicine can quickly add significant problems to running a compliant DME business. While, in principle, few would deny the benefits of telemedicine and modern technologies in 21st century medicine, the law has not fully caught up to the omnipresence of telemedicine, in particular when it comes to doing consultations for Medicare patients. In a nutshell, any telemedicine model must be expected to be compared to the traditional doctor-patient office visit. Patient walks in, signs forms, sees medical staff, and ultimately ends in a consultation with a physician. Telemedicine wants to mirror this process. However, almost by definition, unlike a patient seeing a primary care doctor regularly, telemedicine is a sporadic business where a physician often has just a once-in-a-lifetime contact with a patient, cannot touch and examine the patient, and can only offer limited face-to-face time.

Already a brief look into recent press releases by the Justice Department shows that dozens and dozens of physicians and healthcare business owners have been indicted for their role in alleged telemedicine fraud schemes. Frankly, telemedicine is a judicial and legal landmine. From the triage to the actual consultation, to the compensation structure of physicians, to having an appropriate doctor-patient relationship, to running staggering approval rates: there is so much that is still ignored in the industry and so many new telemedicine investigations are coming to Nick each month. If telemedicine is an integral part of your DME business, be aware, it can be done, but it should be done with caution and accompanying sound legal advice. Call Nick Oberheiden today and find out what traps to avoid in telemedicine arrangements, how to establish a real doctor-patient relationship, and how to protect your DME business against being investigated for the mistakes of the telemedicine operators.

No Compliance Program

Given that mistakes in running a healthcare business are not just possible but very likely and very common, each business owner must make a fundamental decision. Do I risk being caught with errors or do I get good sleep at night knowing that I have the paperwork and agreements in place that will shield me from criminal allegations if I get caught with mistakes in audits, search warrants, or lawsuits?

What does not help and what does not work is to simply assume that, if you get on the radar, that the government will believe you that you had the right intent. No one will take an x-ray of your brain to determine if you are a good person. In fact, in healthcare, the second most regulated industry in the United States, the burden of proof that you are actually compliant is on you. True is that the government has the burden of proof that you are guilty; but that scenario assumes that you have been arrested and indicted. Who wants to go through the ordeal of being arrested and indicted to then say: “But I had no unlawful intent.”

Your best bet is prevention. Have Oberheiden PC establish structures, procedures, policies, protocols, and guidelines. Obtain the right contracts and documentation so that you don’t need to wonder anymore whether the contract you just signed can get you in trouble. Make sure your staff is trained, your marketers are educated. staff. Make sure you cover all your exposure areas, and remember: you may have lawful intent but what safeguards do you have, what written evidence do you have that everyone else working on your behalf shares your maxims and policies? Think of John in the introductory example. It wasn’t him, it was someone else working for him that got him in the middle of a life-changing federal criminal investigation.

Contact Federal DME Fraud Defense Lawyer Dr. Nick Oberheiden Today

Contact the trusted DME fraud defense attorneys of Oberheiden PC. Get former federal prosecutors and experienced attorneys on your team that can take of your legal concerns—while you build your business safely and with confidence.

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