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Catch of the Week: Telemedicine Company Owner Charged in $784 Million Kickback Scheme

Posted  August 20, 2021

Underscoring the fraud risks associated with the government’s continued expansion and loosening of restrictions on telehealth, the U.S. Department of Justice recently announced that a grand jury in New Jersey has returned a superseding indictment against the Florida owner of multiple telemedicine companies, referred to by DOJ prosecutors as the Video Doctor Network, for allegedly participating in a massive Medicare fraud scheme.

The “Video Doctor” Kickback Scheme

Creaghan Harry, of Highland Beach, Florida, is charged in the superseding indictment with conspiracy to commit health care fraud and wire fraud, as well as income tax evasion.  He was previously charged along with two co-conspirators with conspiracy to defraud the United States, paying and receiving kickbacks, and money laundering.  Specifically, Harry is alleged to have solicited illegal kickbacks and bribes from durable medical equipment (DME) suppliers and marketers in exchange for orders involving DME braces and medications.

In order to conceal these kickbacks, Harry is alleged to have directed the DME suppliers to pay him through a complex web of shell companies in the US and various Latin American countries.  He is alleged to have then transferred funds from these shell companies to his telemedicine companies to pay physicians to write medically unnecessary orders for DME-related treatments.  Patients who received these “treatments” were contacted through an international telemarketing network.  The DME suppliers participating in this scheme fraudulently billed Medicare over $784 million for these supplies and were ultimately paid more than $247 million.

Prior Guilty Plea by a Telemedicine Executive

One of Harry’s alleged co-conspirators, Lester Stockett, the owner of the Video Doctor Network and CEO of AffordADoc, plead guilty in September 2019 for his involvement in the telemedicine kickback and money-laundering scheme.  At that time, Assistant Attorney General Brian Benczkowksi stated that Stockett and his co-conspirators had “lined their own pockets with hundreds of millions of dollars by exploiting telemedicine technology meant to help elderly and disabled patients in need of health care.”

Loosening Restrictions on Telehealth Has Benefits – and Costs

As previously discussed in the Whistleblower Insider (see below), in the last few years CMS and other government agencies have loosened restrictions on telemedicine that have dramatically increased its availability.  Particularly during the COVID-19 pandemic, much of this expansion benefits patients insofar as it makes medical treatment more readily available to individuals who live in rural areas or are too sick to travel to see a physician in person.  But as the patient-physician relationship becomes more attenuated, new opportunities arise for fraudsters to step in-between and bill Medicare, Medicare, and other public or private insurers for medically unnecessary and harmful treatments, drugs, and supplies.

Whistleblowers Can Help Stop Telehealth Fraud

Absent stronger government oversight, more telehealth fraud schemes by unscrupulous DME suppliers, corporate executives, and physicians, like those involved in the international Video Doctor/AffordADoc case, are sure to arise.  Whistleblowers can help stop this fraud from harming vulnerable patients and protect taxpayer dollars by filing a complaint under the False Claims Act or another state or federal whistleblower reward program.

If you have information that a person or company is defrauding the government or private healthcare programs and would like to speak to an attorney about whether you have a whistleblower case, please contact us confidentially.


Tagged in: Catch of the Week, COVID-19, FCA Federal, Government Programs Fraud, Healthcare Fraud, Importance of Whistleblowers, Lack of Medical Necessity, Medical Devices and DME, Medicare, Money Laundering, Whistleblower Rewards,