Fraud Cases

Recent growth in the telemedicine field as a result of COVID-19 has prompted the government to take an aggressive approach in targeting suspected healthcare fraud. As more healthcare providers adapt to the new environment under COVID-19 and try to provide telemedicine services to their patients, there is a real risk that the government ends up targeting providers who are new to telemedicine and are simply making mistakes due to a lack of familiarity with the regulations. Further increasing this risk is the fact that the federal government has created “dozens of new billing codes” and waived certain limitations and regulations given the COVID-19 pandemic, making it harder for healthcare providers to know what is and isn’t allowed in the rapidly changing new world of telemedicine.

Recent developments in the DOJ’s approach to targeting PPP loan fraud offenses suggest that the DOJ is going to increase its use of criminal “conspiracy” laws to charge multiple defendants together for schemes involving PPP loans.

The Second Circuit upheld a conviction for using fictitious government documents because 18 U.S.C. § 514 applies to both fake versions of existing documents and wholly contrived, fake documents. The Court held that evidence that a defendant used inauthentic documents, misrepresented government employment, and paid with fake purchase orders is sufficient to uphold a conviction.

The Eleventh Circuit vacated a conviction for conspiracy to receive illegal kickbacks in relation to a federal health care program, holding that the government must prove that a defendant charged under 42 U.S.C. § 1320(a)-7b(b) in conjunction with conspiracy under 18 U.S.C. § 371, the government must prove that federal funds passed through the conspiracy.

Throughout July, the Department of Justice has been announcing an increasing number of prosecutions against individuals accused of “COVID Relief Fraud,” also referred to as CARES Act Fraud. Most cases involved the CARES Act’s Paycheck Protection Program (PPP). The past week saw cases brought across the country from California to Florida and included charges for wire fraud, bank fraud, false statements, money laundering, and healthcare fraud.

The Eleventh Circuit affirmed the defendant’s conviction for healthcare fraud, holding that there was sufficient evidence based on testimony regarding “red flags” at the defendant’s pharmacy, including patients from out of state, unrealistically high prices, and discrepancies in billing and inventory. The Court also rejected the defendant’s challenges to lay witness testimony from patients stating they received medication that they did not need and held that the Government replacing its expert did not prejudice the defendant where the substance of the testimony stayed the same.

The Eleventh Circuit affirmed the defendant’s sentence, holding that the district court properly estimated the loss amount based on specific, circumstantial evidence of causation, namely that the defendant’s investors relied on the defendant’s fraudulent representations, and that the court did not err in rejecting the defendant’s intervening causation theory. The Court also held that the defendant’s claims on remand before the district court where limited by the scope fo the appellate court’s mandate on remand and did not fall under any of the three exceptions.

On July 8, 2020, federal prosecutors in the Southern District of Florida charged a father and his adult sons with criminal violations relating to distribution of misbranded drugs. According to the criminal complaint, the government is alleging that the men operated a church, the “Genesis II Church of Health and Healing,” through which they sold and marketed “Miracle Mineral Solution,” a bleaching agent that the men allegedly sold as a “miracle cure-all that could treat, prevent, and cure a variety of serious diseases and disorders, including cancer, Alzheimer’s, autism, malaria, Parkinson’s, multiple sclerosis, and HIV/AIDS.” Most recently, the men promoted Miracle Mineral Solution as a cure for COVID-19.

The Court affirmed the defendant’s conviction under 18 USC 912 for impersonating a U.S. employee and acting in conformity with that pretense, rejecting his argument that the offense requires an intent to defraud. The Court held that all that was required was impersonating an officer and an “overt act” which causes a victim to take a course of action they otherwise wouldn’t, which in this case was satisfied because the defendant’s high school crush opened her door to him and let him in based on her belief that he was a DEA agent.

The DOJ announced charges against the president of a California-based medical company, alleging a scheme to solicit investors, manipulate his company’s stock price, and commit healthcare fraud  based on his company submitting false claims to the federal government for COVID-19 testing. The charges include one count of securities fraud and one count of conspiracy to […]