EnforceMintz — Telemedicine Enforcement: Trends in 2024 Suggest More Sophisticated Enforcement to Come in 2025
The Department of Justice (DOJ) and the Office of the Inspector General for the Department of Health and Human Services (OIG) have historically focused their virtual health care enforcement efforts on “traditional” telemarketing, broker, runner, and related schemes. These arrangements generally involve sales agents, recruiters, or marketers who direct patients to purported telemedicine companies, which then enter into payment arrangements with physicians and/or non-physician practitioners for the provision of medically unnecessary health care services. The practitioners often have limited or no interaction with the supposed patients, do not review or have access to patient medical records, and order or prescribe medically unnecessary items or services from a predetermined list.
In July 2022, the OIG formalized its concerns regarding such arrangements in a Special Fraud Alert. As noted by the OIG, these schemes implicate multiple civil and criminal laws, including the federal Anti-Kickback Statute, the Civil Monetary Penalties Law, the civil False Claims Act (FCA), and criminal fraud statutes. The OIG further stated that these arrangements have the potential for considerable harm to both federal health care programs and program beneficiaries, including (1) inappropriate increases in costs for medically unnecessary items and services, (2) patient harm or delayed clinical services, and (3) corruption of medical decision-making.
While DOJ and the OIG have continued to pursue and investigate telefraud schemes, two cases announced in 2024 demonstrate a shift in telemedicine enforcement from “traditional” schemes to more sophisticated investigations and potential criminal exposure in certain matters.
First, in June 2024, Ruthie He, the founder, CEO, and clinical president of Done Global (Done), and David Brody, clinical president of Done and the sole physician shareholder of Done Health, P.C., were indicted, arrested, and arraigned in a first-of-its-kind telemedicine criminal prosecution (see our prior post here). Both He and Brody face a seven-count indictment alleging conspiracy to distribute controlled substances, aiding and abetting the distribution of controlled substances, conspiracy to commit health care fraud, and conspiracy to obstruct justice.
The indictment alleges that He and Brody orchestrated a scheme to generate over $100 million in revenue by inappropriately offering Adderall and other stimulants for the treatment of attention deficit disorder. Among other allegations, the defendants purportedly violated the prohibition against the corporate practice of medicine and directed practitioners to prescribe and renew Adderall prescriptions without clinical justification. The practitioners were allegedly paid based upon an above-market pay structure tied to the number of patients ultimately receiving prescriptions. Indeed, the indictment asserts that prescribing practitioners often were not licensed in the states where prescriptions were issued and that Adderall and other stimulants were ordered in violation of state physician supervision requirements.
The prosecution of He and Brody is proceeding in federal court in the Northern District of California before Judge Breyer. In October 2024, He’s bond was revoked, and she was remanded to custody as a flight risk. On December 2, 2024, He filed a motion to dismiss or, in the alternative, moved to compel disclosure of grand jury materials. The motion asserts that the indictment fails to satisfy the knowledge requirement under the Controlled Substances Act, that the health care fraud conspiracy elements have not been adequately alleged, and, in the alternative, that He should be entitled to grand jury materials. On December 16, 2024, DOJ opposed the motion to dismiss, arguing the sufficiency of the indictment and contesting the disclosure of grand jury materials. The motion to dismiss is currently pending.
In addition to He and Brody, several other Done personnel have cases pending in the Northern District of California. Two Done nurse practitioners and an executive leader have cases pending before Judge Breyer. In the last related case, a Done physician has entered a plea agreement.
Second, also in June 2024, a behavioral health telemedicine holding company and its practice affiliates (collectively, Supportive Care) agreed to pay approximately $4.6 million to resolve allegations related to the submission of false claims to Medicare and the Connecticut Medicaid program. Interestingly, DOJ alleged that the telemedicine company submitted false claims for “telehealth originating site facility fees.” Under the applicable Medicare billing code, telehealth originating site fees are only billable when the originating site (in this case the nursing facility) provides administrative and clinical support for the telehealth patient. Instead, here, the telemedicine company and its affiliates billed for the originating site facility code.
Additionally, DOJ alleged that Supportive Care submitted false claims for psychological services for Medicare and Medicaid beneficiaries residing in nursing facilities. DOJ alleged, however, that the beneficiaries were not in fact residing in the nursing facilities and had been transferred to various hospitals and admitted as inpatients. The settlement resolved both sets of FCA allegations.
These two cases demonstrate that DOJ and the OIG are expanding their investigation and enforcement activities beyond “traditional” telefraud arrangements into more complex areas. In the Done prosecution, DOJ is seeking to criminally enforce allegedly fraudulent telehealth activity implicating compliance with state corporate practice and physician supervision requirements. In the Supportive Care resolution, DOJ and the OIG focused on the alleged failure to adhere to telehealth-specific codes. Both matters portend a trend likely to continue in 2025 whereby a maturing telehealth industry is subject to more sophisticated government investigations.
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