Regency: Hidden Owners, Purchased Orders

In the Regency telemedicine settlement, Regency, Inc. and its owner agreed to pay up to $20,332,516, based on their ability to pay, to resolve allegations involving concealed supplier ownership, medically unnecessary equipment and kickbacks. The alleged business connected ready-made Medicare suppliers with purchased doctors’ orders. The complaint describes Medicare paying for braces that beneficiaries had refused. Taxpayers paid while unwanted equipment came back to the supplier.

Regency was a company based in Largo, Florida, that helped establish durable medical equipment suppliers. The Justice Department announced the civil settlement on February 4, 2021, resolving allegations of false enrollment documents and improper marketing practices that allegedly violated the Anti-Kickback Statute. A former Regency employee brought the whistleblower case.

The government’s complaint seeking an injunction shows what those allegations looked like inside the business. It describes suppliers that appeared independent on paper, orders sold as leads, and employees handling complaints about braces beneficiaries said they never wanted.

Supplier Companies Built to Hide Their Owners

Regency allegedly sold ready-made durable medical equipment companies whose enrollment documents hid the people controlling them. The government’s complaint says the Medicare enrollment form, CMS-855S, substituted straw or nominee owners for the real owners and managers.

Getting a supplier ready to bill involved corporate filings, enrollment paperwork, a lease and inspections. According to the complaint, Regency packaged that work into companies buyers could acquire through stock purchases. The alleged attraction was immediate access to an established Medicare billing number.

The government described a customary initial down payment of $30,000 for creating a supplier front, with another installment typically due after Medicare approval. The product Regency allegedly sold was a company ready to submit claims.

That mattered when an existing supplier attracted scrutiny. The complaint describes owners moving claims between companies they controlled:

Concealed ownership helped make that move possible. A new company name could sit over the same people and the same order business.

The government also alleged that suppliers used fake inventory contracts with Magic Medical to satisfy inspectors. Some contracts predated Magic Medical’s existence. On the government’s account, a supplier relationship appeared on paper before the supposed supplier existed.

The Telemedicine Rationale Behind the Orders

In its account of the owner’s criminal guilty plea, the Justice Department said the conspirators used telemedicine to explain the unusually high volume of equipment claims. It described dozens of supplier fronts under concealed control. It said the conspirators collectively submitted more than $400 million in claims to Medicare and CHAMPVA, the veterans’ family health care program.

That criminal account said doctors had been bribed to approve the orders and almost always had no telehealth interaction with beneficiaries. The supposed clinical process supplied the explanation for the volume. Paid approvals supplied the orders. The Justice Department identified the prosecution as part of Operation Brace Yourself.

A remote-care episode involves patient information, a clinician’s assessment, an order where appropriate, documentation and follow-up. In an order-selling arrangement, the signed order itself becomes something another business buys.

HHS-OIG’s July 2022 telemedicine fraud alert describes that broader model: companies recruit beneficiaries and practitioners, pay for reviews or signatures, and transfer the resulting orders to downstream buyers. An order-producing network can generate equipment claims without billing Medicare for the purported consultation. Following only the visit bill can miss the transaction that pays.

What the Brace Business Paid For

The government’s Regency complaint describes a prepaid price of $280 per doctor’s order charged by a cooperating telemarketing operator. It alleges that the operator split the charge between invoices for marketing and business processing to disguise the transaction.

The same account explains the incentive to sell more braces to each beneficiary. The operator described the order fee as approximately his break-even cost and said multiple products made the arrangement profitable. Call-center employees were directed to persuade beneficiaries to accept additional braces.

At Advanced Medical Supply, a Regency-established supplier, a former employee described the economics from her training. According to the complaint, trainers said braces cost approximately $50, while she understood that the company could receive almost $1,000 from Medicare. She also said employees were told that the company bought leads and that they should not tell anyone it did.

Those accounts describe different transactions within the alleged system: establishing a supplier, buying an order and billing for equipment. The people handling enrollment, marketing invoices and Medicare claims could each see a different part of the business.

The Signature on the Returned Box

A former employee’s account in the government complaint connects the purchased orders to equipment beneficiaries refused. At Advanced Medical Supply, she fielded calls from people who said they had not wanted, ordered or needed the braces. Many said their physician had never prescribed them.

She was also responsible for preparing responses to insurance audits. Those packages included a prescription and a delivery signature intended to show that a beneficiary had received the equipment. The complaint describes what she noticed:

In her account, her signature meant the unwanted equipment had come back to the office. It was appearing in files as evidence that the beneficiary had received it.

The employee also reported seeing Medicare payments for equipment beneficiaries had refused. According to the complaint, she raised the issue with a manager and Regency’s owner on several occasions. Her account connects the order, the delivery record, the payment and the people told about the discrepancy.

A Separate Florida Billing Case

HHS-OIG’s fall 2021 account of a Florida doctor’s criminal case reported over $20 million in false claims, of which approximately $10,711,490 was paid. Those were payments on false claims, not just bills sent to a program.

The distinction between claims submitted and money paid also matters in Regency’s alleged operation. The customer-service employee described Medicare paying for equipment the beneficiary had refused. Her account joined that payment to a single delivery and the returned box.

What Evidence Is Needed to Prove Fraud?

In a supplier-and-order case, useful evidence connects who controlled the company, who paid for the order, what the clinician actually did and what the supplier billed. Regency’s alleged operation makes those connections unusually concrete.

The enrollment paperwork named the reported owner. The company-sale records showed how a supplier changed hands. Marketing invoices described payments for orders. Customer-service calls, returned packages and audit files showed what beneficiaries received and what the business told Medicare.

An enrollment employee may know whose name was left off the form. An accounts-payable employee may know what an invoice bought. A customer-service employee may know why a delivery receipt points to the wrong recipient. Our work with an insider brings those pieces together around the transactions they explain.

How Much of a Settlement Does a Whistleblower Get?

The Regency announcement said the former employee would receive 23% of the civil recovery. The criminal account described claims on a scale far above the civil settlement ceiling. That ceiling depended on what the company and its owner could pay. A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers.

You Know Who Controlled the Supplier

If you saw supplier ownership concealed, orders bought through marketing invoices or returned equipment presented as delivered, speak to one of our whistleblower experts about who really controlled the supplier. We match your case with healthcare fraud whistleblower lawyers who understand durable medical equipment suppliers, telemedicine orders and kickback payments. We put your knowledge of the business to work on your strongest healthcare fraud whistleblower case and stay with you through the process.