DME, Genetic Testing and Pain Cream Fraud: The Same Order Network, Different Claims

DME, genetic testing and pain cream fraud can run through the same telemarketing and prescriber network, with suppliers, laboratories and pharmacies billing for different products. Federal cases describe marketers obtaining beneficiary information, clinicians signing orders and businesses buying those orders to generate claims. For someone working in order review, supplier billing, a laboratory or a pharmacy, the connection may be visible before the claims ever reach Medicare: different products arriving through the same source.

The shared machinery matters. So does what each business bills. A brace, a genetic test and a compounded cream raise different questions about the patient, the product and the payment.

The Order Is What the Network Sells

The signed order can itself be a product, bought by the business that will submit the claim. The Department of Health and Human Services’ Office of Inspector General, in its July 2022 telemedicine fraud alert, describes companies selling orders or prescriptions generated by practitioners to other businesses. It identifies call centers, staffing companies, marketers and brokers alongside the clinicians.

The fee can be described as payment for reviewing, auditing or assessing a medical chart. The inspector general focuses on arrangements where compensation follows the volume of items ordered and the practitioner lacks enough contact with the patient to assess medical need. A company can supply a template that looks like a medical history while containing little more than demographic information.

There is a commercial decision before the clinical one. The inspector general describes companies offering only a single product or product class, such as durable medical equipment, genetic testing or prescription creams, potentially restricting the practitioner’s choices. The sales operation has already decided what it wants an order for. The clinician’s signature supplies the next thing it needs.

Brace Yourself, Double Helix and Rubber Stamp: The Order-Selling Connection

Operation Brace Yourself and Operation Double Helix pursued similar order-selling arrangements involving different products. The April 2019 brace indictments alleged that an international call center promoted free or low-cost braces, paid telemedicine companies to obtain orders and sold those orders to durable medical equipment suppliers. The telemedicine companies allegedly paid physicians to prescribe medically unnecessary braces. Suppliers then billed Medicare.

The September 2019 genetic-testing charges described laboratories paying kickbacks for referrals through telemedicine companies. Doctors allegedly ordered cancer genetic tests without treating the beneficiaries, sometimes without speaking to them. The Justice Department said test results often never reached the beneficiaries or were worthless to their actual doctors. The alleged scheme put taxpayers’ money into tests that gave beneficiaries no useful answers. The billable test had become detached from the care it was supposed to inform.

The crossover appeared within the charges themselves. The Southern District of Georgia defendants included physician recruiters, clinicians, order brokers and durable medical equipment companies. The Justice Department attributed more than $400 million in alleged Medicare billing to genetic tests, durable medical equipment and pain creams together.

In its October 2020 Operation Rubber Stamp announcement, the Justice Department connected the three operations. It described criminal filings alleging that businesses collected patient data and sold it to durable medical equipment suppliers, pharmacies or laboratories. Following the patient information and the order explains the relationship between the operations better than treating each product as an isolated scheme.

How Are Referral Payments Disguised?

A payment tied to laboratory revenue can appear on an invoice as an hourly service fee. The same September 2019 announcement described criminal charges involving Ark Laboratory Network, which allegedly arranged for laboratories to pay bribes for DNA samples and genetic-test orders. The payments were based on the Medicare revenue the laboratories received.

The Justice Department alleged that participants concealed the arrangement through sham invoices claiming hourly services, even though they had already agreed on a revenue-based bribe. For someone handling the invoices, the question is what determined the payment: hours worked or the business sent to the laboratory.

One Prescriber, Several Products

A single prescriber’s work can connect equipment and laboratory claims. In a June 2022 civil resolution, a Paducah physician admitted False Claims Act liability arising from a telehealth scheme involving orders for durable medical equipment and genetic tests. He admitted liability of $11,025,088 but settled for $561,800.

The Justice Department’s telemedicine case summaries describe an indictment against a Tennessee physician who allegedly signed orders and prescriptions for all three products: durable medical equipment, topical creams and cancer genetic testing. He allegedly worked for several purported telemedicine companies, signed without establishing a doctor-patient relationship and had only brief telephone conversations, if any, with beneficiaries. The indictment alleged that he disregarded medical necessity.

For an order reviewer, that is a recognizable business problem. The same signing clinician can sit behind a brace supplier’s order, a laboratory requisition and a pharmacy prescription. Looking only at one business’s claims can leave the common source out of view.

The Product Determines the Claim

The order-producing arrangements described by the inspector general make money by selling the order onward, so the supplier or laboratory claim can be the payment the network is working toward.

For equipment billed to Medicare Part B, the standard documentation requirements call for a treating practitioner’s written order and supporting medical information. A signed supplier-prepared statement alone does not establish medical necessity. Templates must agree with the medical record. The signature is one part of the documentation, not the whole clinical justification.

Genetic-testing claims in the 2019 indictments went to Medicare and Medicare Advantage plans. The allegations concerned tests ordered without a treatment relationship, without medical necessity and in exchange for kickbacks. The patient’s actual care and the laboratory’s claim remain central even when the referral came through a network also selling brace orders.

Prescription creams add another question: what ingredients did the pharmacy actually use, and what did it tell the payer it used?

Compounded Creams Add an Ingredient Question

Cooley Medical Equipment agreed to pay $5,254,912 in its October 2018 civil settlement, admitting that it billed for cream-based lidocaine and prilocaine while using bulk powders. The Kentucky equipment supplier also operated a compounding pharmacy.

The Justice Department’s announcement explained the payment rules at issue: Medicare Part D did not cover bulk powder ingredients, while Kentucky Medicaid and the Department of Veterans Affairs’ CHAMPVA program required prior authorization for those ingredients.

The false ingredient description changed what the insurers were being asked to pay for. Someone who knew what went into the preparation could recognize the discrepancy between the pharmacy’s work and its claims.

The Sales Call Can Change Products

A whistleblower complaint against Arizona Medical Supply, which operated as Western Medical and Senior First Medical, alleged that the sales process extended from braces into creams for pain or scarring. The whistleblower said sales representatives told beneficiaries that Medicare covered creams their doctors could prescribe. The complaint then described how an existing file became a prescription request:

The allegation shows why the beneficiary file matters across products. The sales representative already had insurance and physician information to confirm. The conversation supplied another product to pursue, and the prescription request went to the physician afterward. Someone who handled those calls or forms may know how the product was selected before the doctor signed.

What Evidence Is Needed to Report Medicare Fraud?

We help connect the patient information, the clinical encounter, the signed order, the payment for obtaining it and the resulting claim. In a business handling several products, the common prescriber or order source may connect claims that otherwise appear to belong to separate suppliers, laboratories and pharmacies.

The software can explain how the documentation was produced. In a criminal indictment described by the Justice Department, executives of purported software and services companies allegedly arranged the sale of templated orders for braces and pain creams. The indictment alleged that the platform generated false certifications of in-person examinations and diagnostic testing and concealed the use of telemedicine. A complete-looking order could carry an encounter that never happened.

The prescription, template and billing record each show a different part of that allegation. The clinician knows what contact occurred. The platform staff know how the form was populated. The business buying the order knows what it paid and where the order went next. Putting those accounts together gives the paperwork its meaning.

The inspector general’s Medicaid Fraud Control Units Fiscal Year 2023 Annual Report, published in 2024, describes state cases beginning with outside referrals or data mining. A pattern can identify the claims to examine. Someone inside the business can explain who chose the product and how the order was obtained.

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

Who Was Behind the Orders?

If you recognize a prescriber, a template or a payment arrangement running across braces, tests and creams, talk with our whistleblower experts about the business behind those orders. We build a case strategy around what you know and bring in healthcare fraud whistleblower lawyers who understand telemedicine referrals and the claims they produce. We stay beside you as the case reaches from your part of the operation to the people directing it.