Telemedicine CEO Jailed for 15 Years, Ordered to Pay $452M in $1B Medicare Fraud

The former chief executive of Power Mobility Doctor RX (DMERx), Gary Cox, has been sentenced to 15 years in prison and ordered to pay more than $452 million (£334.7 million) in relation to a conspiracy to defraud Medicare of approximately $740.6 million (£1 billion). The 79-year-old, based in Maricopa County, was found guilty of orchestrating a scheme involving false doctors' orders to facilitate hundreds of millions of pounds worth of fraudulent claims for a variety of medical products.

Cox was convicted of multiple offences, including wire fraud, three counts of healthcare fraud, conspiracy related to kickbacks within the healthcare sector, and making false statements in connection with healthcare matters.

'This sentence sends a clear message: those who exploit telemedicine to prey on seniors and steal from taxpayer-funded healthcare programmes will be held accountable,' stated Christian Schrank, Deputy Inspector General for Investigations at the Department of Health and Human Services. 'This scheme was a massive betrayal of trust, built on deception and greed. Our investigators, working alongside law enforcement partners, dismantled this billion-dollar fraud operation that targeted vulnerable patients and undermined the integrity of Medicare,' he added.

Targeting Beneficiaries and Exploiting Telemedicine

Cox and his co-conspirators targeted hundreds of thousands of Medicare beneficiaries through a combination of misleading mailers, television advertisements, and call centre calls. These tactics led individuals to disclose personal information and agree to receive medically unnecessary orthotic braces, pain creams, and other items.

The accused operated DMERx, an online platform that generated false doctors' orders for these items. He then connected pharmacies, suppliers of durable medical equipment (DME), and marketers with telemedicine companies that accepted illegal kickbacks and bribes in exchange for signing doctors' orders transmitted through the online system.

The fraudulent doctors' orders falsely indicated that a licensed medical professional had examined and treated each Medicare beneficiary. Even telemedicine firms paid doctors for their signatures, regardless of whether a real consultation had taken place.

According to the US Department of Justice, Cox and his co-conspirators received payments for orchestrating these transactions and referring the false doctors' orders to DME suppliers, pharmacies, and telemarketers that paid kickbacks and bribes for the referrals.

Law Enforcement Response and Broader Implications

Reiterating the importance of combating healthcare fraud, Acting Assistant Director Rebecca Day of the FBI's Criminal Investigative Division stated, 'Together with our partners, the FBI will continue to pursue those who defraud taxpayer-funded healthcare programmes. Programs like Medicare are intended to help the most vulnerable among us, and fraud schemes like the one orchestrated by the defendant can jeopardize the delivery of critical care to those who need it the most.."

Billions in Fraudulent Claims and Hidden Schemes

The DME providers and pharmacies involved in the scheme billed Medicare and other insurers over $1 billion (£740 million), with more than $360 million (£266.6 million) paid out based on these fraudulent claims. Cox managed to conceal the scheme through false contracts and elaborate cover-ups.

'This just sentence is the result of one of the largest telemarketing Medicare fraud cases ever tried to verdict,' said Acting Assistant Attorney General Matthew Galeotti of the Justice Department's Criminal Division. 'Telemedicine scammers who use junk mailers, spam calls, and the internet to target senior citizens steal taxpayer money and harm vulnerable populations. The Criminal Division will continue dedicating substantial resources to the fight against telemedicine and medical equipment frauds that drain our health care benefit programs,' he added.

Since March 2007, the Justice Department's Fraud Section, operating nine strike forces across 27 federal districts, has charged more than 5,800 defendants. These individuals collectively billed over $30 billion (£22.2 billion) to federal healthcare programmes and private insurers.