Thousands of patients lose over $1bn in major US healthcare scam

Scheme involved provision of wrist, knee and other braces to elderly, disabled patients who did not need them

WASHINGTON: One of the largest healthcare frauds in American history caused more than $1 billion in losses after hundreds of thousands of patients were lured into the scheme, US investigators said on Tuesday, announcing charges against 24 people.

The alleged scheme involved the provision of wrist, knee and other braces to elderly and/or disabled patients who did not need them, but who were covered by the Medicare public insurance system.

They were lured by an international telemarketing network involving call centers in the Philippines and Latin America, the Department of Justice said.

The defendants allegedly paid doctors to prescribe the braces without meeting patients.

"Proceeds of the fraudulent scheme were allegedly laundered through international shell corporations and used to purchase exotic automobiles, yachts and luxury real estate in the United States and abroad," DOJ said in a statement.

Medicare got the bills which allegedly reached more than $1.7 billion in claims. Those charged in the multi-state operation included CEOs and other executives with telemedicine companies, the owners of dozens of medical equipment firms, and doctors.

DOJ said the schemes involved "more than $1.2 billion in loss."
Administrative penalties were also issued against 130 orthopedic equipment suppliers, DOJ said.

"Today, one of the largest healthcare fraud schemes in US history came to an end," said Robert Johnson, assistant director of the FBI, one of several agencies involved.

US Attorney Sherri Lydon, of South Carolina, added that white collar crime is not victimless. "All taxpayers will endure the rising cost of healthcare premiums and out-of-pocket costs as a result of fraud on our Medicare system," Lydon said.

The Medicare system was created in the 1960s to provide public health insurance for Americans older than 65. It has been extended to the poorest, disabled, children, and military veterans, now covering 112 million people. But the system is regularly defrauded.

The Medicare Fraud Strike Force, created in 2007, has charged nearly 4,000 people related to billings of more than $14 billion in total, DOJ said.