Columbia, South Carolina: United States Attorney Sherri A. Lydon announced today one of the largest health care fraud schemes in the history of the Federal Bureau of Investigation (FBI), the Department of Health and Human Services Office of the Inspector General (HHS-OIG), and the Internal Revenue Service Criminal Investigation Division (IRS-CID). The announcement was made at a press conference at Palmetto GBA in Columbia, South Carolina, a Medicare administration contractor whose payment safeguarding services seek to eliminate Medicare abuse, fraud, and waste.
Operation Brace Yourself, which originated in South Carolina, has resulted in the execution of over 80 search warrants in 17 federal districts and charges against 24 defendants so far. These defendants include owners, managers, and others associated with six telemedicine companies, the owners of dozens of durable medical equipment (DME) companies, and three licensed medical professionals. The alleged health care fraud scheme involves more than $1 billion in loss.
“Simply put, the law applies equally to all in South Carolina,” said U.S. Attorney Lydon. “The same spoon that serves indictments on drug dealers, felons in possession of firearms, and corrupt officials will also feed those companies and individuals who engage in Medicare fraud. White collar crime is not victimless. All taxpayers will endure the rising cost of health care premiums and out-of-pocket costs as a result of fraud on our Medicare system. I am honored to stand with our partners at the FBI, HHS-OIG, and IRS-CID, who led this outstanding and nationally significant investigation from right here in South Carolina.”
“This case demonstrates the ability of the FBI in South Carolina to successfully investigate the most expansive and complex of investigations. Wherever facts take us, the FBI is always ready to pursue perpetrators and bring them to justice,” said FBI Special Agent in Charge Jody Norris.
“Health care fraud schemes, such as the massive, sweeping operations charged here, divert desperately needed funding from government health programs and the people they serve,” said Derrick Jackson, Special Agent in Charge, Department of Health and Human Services Office of Inspector General for the region including South Carolina. “Working closely with our law enforcement partners we are dedicated to disrupting schemes of health care organization owners, managers, licensed medical professionals, and others intent on enriching themselves at the expense of U.S. taxpayers. All contemplating such ill-gotten gains should expect aggressive investigation and prosecution.”
“The American tax system is designed to provide vital government services to our citizens. It is not a slush fund for thieves and fraudsters,” said IRS-CID Special Agent in Charge Matthew D. Line. “IRS Criminal Investigation is committed to unraveling complex financial transactions and money laundering schemes where individuals attempt to conceal the true source of funds. We stand committed with our partners to pursue and prosecute those involved to the fullest extent of the law.”
“Palmetto GBA is committed to assisting law enforcement and other agencies in their efforts to identify and prevent Medicare fraud. Protecting the Medicare program from fraud is important to all of us, including the seniors that rely on Medicare for their health benefits, the providers that furnish their care, and the taxpayers who pay for it,” said Palmetto GBA President and COO Joe Johnson.
The charges announced today aggressively target an entire scheme of health care fraud, from the initial kickback through the billing of Medicare. The alleged scheme began with payments of kickbacks by DME companies to an offshore call center. The call center purchased advertisements that targeted Medicare beneficiaries. The calls were routed overseas and to call centers run by members of the conspiracy. The call centers “up-sold” the beneficiaries to get them to accept numerous “free or low-cost” DME braces, regardless of medical necessity. The caller was then routed to medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist and knee braces that were often medically unnecessary.
Certain members of the conspiracy allegedly controlled an international telemarketing network that lured over hundreds of thousands of elderly or disabled patients into a criminal scheme that crossed borders. They allegedly paid doctors to prescribe DME either without any patient interaction or with only a brief telephonic conversation with patients they had never met or even set eyes on. The physicians’ “prescriptions” were then sent back to the call center, which provided the “prescription” and other information to the DME companies. Two dropship companies that were indicted would then ship low-cost Chinese made braces to the Medicare patients. The DME companies would then fraudulently bill Medicare. The proceeds of the scheme were laundered through international shell corporations and used to purchase exotic automobiles, yachts, and luxury real estate.
In the District of South Carolina, charges were brought against Andrew Chmiel, 43, of Mt. Pleasant, South Carolina, and companies in which he had an ownership interest—including 10 DME companies, two dropship companies, and two additional companies that facilitated the fraud—for their alleged participation in a $200 million scheme related to the payment of kickbacks and bribes in exchange for medically unnecessary DME orders. The charges are the result of an extensive investigation by the FBI, HHS-OIG, and IRS-CID. The case is being prosecuted by Assistant U.S. Attorneys Jim May and Will Lewis of the Columbia office.
Image: FBI Columbia Special Agent in Charge Jody Norris is joined by officials from multiple agencies an 9 April, 2019 news conference announcing charges against 24 defendants in a $1.2bn Medicare fraud scheme