DOJ Charges 14 With COVID-Related Fraud Nearing $150M

Ken Terry

May 27, 2021

Editor's note: Find the latest COVID-19 news and guidance in Medscape's Coronavirus Resource Center.

The US Department of Justice (DOJ) on Wednesday announced charges against 14 defendants across the country who allegedly engaged in healthcare fraud schemes that exploited the COVID-19 pandemic and resulted in over $143 million in false billings to Medicare.

Among the defendants, a DOJ news release said, were a telemedicine company executive, a physician, marketers, and medical business owners.

In addition, the Centers for Medicare & Medicaid Services (CMS) separately announced that it had taken "adverse administrative actions" against over 50 providers for their involvement in fraud schemes related to COVID-19 or the abuse of CMS programs that were designed to encourage access to medical care during the pandemic.

Several of the defendants allegedly offered COVID-19 tests to Medicare beneficiaries in senior living facilities, drive-through COVID-19 testing sites, and medical offices to induce the beneficiaries to provide their personal identifying information and a saliva or a blood sample.

The DOJ charges claim the defendants then misused the information and the samples to submit claims to Medicare for unrelated, medically unnecessary, and far more expensive lab tests, including cancer genetic testing, allergy testing, and respiratory pathogen panel tests.

In some cases, it's alleged, the lab results were not provided to the individuals in a timely fashion or were not reliable.

Other defendants are charged with exploiting temporary changes in CMS telehealth regulations that were designed to increase access to healthcare during the pandemic. In these cases, which DOJ said were the first charges related to the expansion of telehealth under the COVID-19 emergency declaration, the defendants allegedly submitted false and fraudulent claims to Medicare for sham telemedicine encounters that did not occur.

"As part of these cases, medical professionals are alleged to have [been] offered and paid bribes in exchange for the medical professionals' referral of unnecessary testing," the DOJ news release said. However, no physicians were identified by the department.

Commenting on this aspect of the law enforcement action, FBI Director Christopher Wray said in the release, "Medical providers have been the unsung heroes for the American public throughout the pandemic. It's disheartening that some have abused their authorities and committed COVID-19–related fraud against trusting citizens. The FBI, along with our federal law enforcement and private sector partners, are committed to continuing to combat healthcare fraud and protect the American people."

The law enforcement action also includes the third set of criminal charges related to the misuse of Provider Relief Fund monies, according to the release.

More than 340 individuals were charged in September 2020 with submitting $6 billion in fraudulent claims to federal healthcare programs and private insurers for telehealth consultations and substance abuse treatment. About $4.5 billion of that was related to telehealth, as reported by Medscape Medical News.

The new criminal charges were brought in federal district courts in Arkansas, California, Louisiana, Florida, New Jersey, and New York.

Case Summaries

The DOJ provided several case summaries. One defendant, lab owner Billy Joe Taylor of Lavaca, Arkansas, was charged with participating in a scheme to defraud the government of over $42 million by filing false claims that were billed in combination with COVID-19 testing claims. He also allegedly billed for tests that were not performed.

Petros Hannesyan of Burbank, California, the owner of a home health agency, was charged with obtaining over $229,000 from COVID-19 relief programs under false pretenses. His firm allegedly misappropriated funds from the CARES Act Provider Relief Fund and submitted false loan applications and a false loan agreement to the Economic Injury Disaster Loan Program.

Michael Stein and Leonel Palatnik of Palm Beach County, Florida, were charged in a connection with an alleged $73 million conspiracy to defraud the government and to pay and receive healthcare kickbacks during the pandemic.

Stein, who owned a "purported" consulting company, and Palatnik, who owned testing labs in Texas, allegedly exploited Medicare's waiver of telehealth restrictions "by offering telehealth providers access to Medicare beneficiaries for whom they could bill consultations. In exchange, these providers agreed to refer beneficiaries to Panda's laboratories for expensive and medically unnecessary cancer and cardiovascular genetic testing."

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