New Jersey DME Company Co-Owner: The $120 Million Admission Behind the Brace Claims

In the New Jersey durable medical equipment fraud case, a company co-owner admitted a $120 million loss in her September 2019 guilty plea. The earlier criminal indictment describes an ownership network built to turn purchased brace orders into Medicare claims, then shift the billing to another company to avoid scrutiny.

The Department of Justice’s charging announcement described the New Jersey pair as owners of approximately 25 durable medical equipment companies and alleged their participation in a $150 million scheme involving kickbacks for medically unnecessary orders.

How Does DME Fraud Work?

In this case, the alleged durable medical equipment fraud worked by buying physician orders, arranging brace shipments and billing Medicare through a network of suppliers. The New Jersey criminal indictment follows the order from an advertisement to the claim. It describes a sales operation reaching into decisions that should have belonged to the patient and physician.

According to the indictment, advertisements offered free or low-cost braces and directed people to call centers in the Philippines. An initial representative, called a fronter, verified insurance coverage. A Medicare Part B beneficiary then moved to another call-center employee, called a chaser, and the call was assigned to a particular equipment supplier.

The chaser allegedly represented themselves as working for that supplier, tried to sell the caller additional braces, and encouraged the caller to use a telemedicine company paid by the call-center operator. If the patient chose their own physician, the employee called that office to seek the order. Otherwise, the patient went to the paid telemedicine channel, where the indictment alleges physicians ordered braces regardless of medical necessity.

Once the call center received a physician’s order, it uploaded the document to a portal the supplier could access. The supplier then arranged shipping and submitted the Medicare claim. The indictment also alleged claims for braces that patients never requested or received.

Why the Owners Kept Changing Companies

The indictment alleged that the owners cycled through durable medical equipment companies to avoid Medicare audits and recovery of improper payments. Multiple supplier names allegedly allowed the same people to keep the business running while closing individual companies. Prosecutors also alleged that the owners hid who controlled those suppliers.

The indictment also alleged that the owners split a patient’s multiple brace orders among different suppliers for fulfillment and billing to avoid suspicion. A patient could receive braces through several company names while the people controlling those companies stayed the same.

The enrollment paperwork was another part of the alleged concealment. The indictment describes Medicare’s requirement that suppliers disclose ownership and managing control on their enrollment application and report changes within 30 days.

The companies had different jobs within the network. According to the indictment, MBW Billing Services handled orthotic-brace billing. AW Medical Solutions and D2D Power Sales were used to move money between suppliers, pay the owners and pay kickbacks for orders.

For an insider, that is the value of knowing who actually ran the business. The owner shown on an application, the person directing billing and the company paying for orders may tell different parts of the same story. Here, prosecutors alleged that concealing those connections was deliberate.

What a Completed Brace Order Cost

The criminal indictment alleged that the owners paid the call-center operator approximately $280 per brace when the order came from a telemedicine physician and approximately $350 per brace when it came from the patient’s primary care physician. The source of the signature changed the price.

The marketing agreements allegedly described the product as raw leads: contact information from people interested in braces. What the suppliers allegedly bought were completed leads, which included the physician’s order. That difference is the center of the alleged kickback arrangement: the purchase delivered a document the supplier could use to bill Medicare.

The indictment gives a concrete example involving Align Back Belt Company. For one New Jersey beneficiary, the owners allegedly paid approximately $1,120 for orders covering four braces. Medicare then paid approximately $2,173 for those braces and an additional lower-leg wrap or sleeve.

The broader industry structure explains why an order has a price. The Department of Health and Human Services’ Office of Inspector General, in its July 2022 telemedicine fraud alert, describes arrangements in which a telemedicine company sells practitioners’ orders or prescriptions to other businesses. In the alleged New Jersey scheme, acquiring that signed order was a commercial transaction before the supplier shipped a brace.

What the Claim Hid From Medicare

The indictment alleged that the billing sometimes described equipment the beneficiary never received. In one example, a Maryland patient received a back brace from B&L Medical Supply, but the supplier billed Medicare for a back brace, a knee brace and two wrist braces. A shipping record and the submitted claim would tell different stories about that delivery.

Another beneficiary asked that equipment not be sent, according to the indictment, but received back and knee braces from Perfect Medical Solutions in Missouri. The company allegedly obtained the physician’s orders through a purchased lead.

In these allegations, the paperwork connected them on Medicare’s claim while the patient’s experience contradicted it.

What the Wider Brace Action Changed

The New Jersey ownership case formed part of a much larger enforcement action. The Justice Department reported that Medicare administrators had taken action against 130 durable medical equipment companies that submitted more than $1.7 billion in claims and received more than $900 million.

In September 2021, the Justice Department estimated that the brace takedown produced more than $1.9 billion in Medicare cost avoidance over the following 20 months.

What Evidence Is Needed to Report Medicare Fraud?

For a case involving purchased brace orders and concealed company control, our whistleblower experts help you connect what you saw at work to the orders, payments and claims behind it. A marketing agreement may describe one transaction while the order portal and payments show another.

People inside health care businesses see different parts of those decisions. Someone in billing may understand the movement between supplier names. Someone in the call center may know how a patient’s request became an order. We build the case around what your work let you see.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Who Ran the Supplier

If you saw the same owners behind changing supplier names or payments for ready-to-bill brace orders, speak to one of our whistleblower experts about who really ran the suppliers. We develop the case with you, bring in durable medical equipment fraud whistleblower lawyers who understand purchased orders and supplier control, and remain your partners throughout the case.