Arizona telemedicine company owners admit $64 mln kickback scheme

A stethoscope rests on a container of hand sanitizer inside of the doctor’s office of One Medical Group in New York March 17, 2010. REUTERS/Lucas Jackson

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(Reuters) – Two owners of a Phoenix, Arizona-based telemedicine company have admitted to taking part in a nationwide healthcare fraud scheme involving kickbacks to doctors that resulted in $64 million in false claims being submitted to government insurance programs, federal prosecutors announced.

RediDoc LLC owners Stephen Luke, 54, and David Laughlin, 48, both Arizona residents, each pleaded guilty on Tuesday before the US District Judge Esther Salas in Newark, New Jersey federal court to charges of conspiracy to violate the federal Anti-Kickback statute and conspiracy to commit health care fraud.

The most serious charges carry up to 10 years in prison, and the defendants are scheduled to be scheduled in October. Their lawyers could not immediately be reached for comment.

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Prosecutors said that, from September 2017 through December 2019, Luke and Laughlin and others orchestrated a “circular scheme” of kickbacks in order to bill Medicare and TRICARE, the federal health insurance program for military service members, for drugs and medical equipment like braces.

Pharmacies and equipment providers allegedly paid kickbacks to marketing companies, who identified Medicare and TRICARE patients to further the scheme. Employees of the marketing companies then called the patients and told them that they had been approved for prescriptions, without truthfully identifying themselves or providing any detail about where the prescriptions originated, in order to get their consent, prosecutors said.

The marketing companies then paid kickbacks to Luke and Laughlin and gave them patients’ personal information, along with pre-filled digital prescription pads. Luke and Laughlin, in turn, paid doctors through sham telemedicine consultations to issue those prescriptions, according to prosecutors.

In fact, prosecutors said, doctors often had no contact with patients, and the drugs and equipment were selected based on high government reimbursement rates, not the patients’ medical needs.

Luke and Laughlin received about $32 million from marketing companies, and submitted fraudulent claims to the government of more than $64 million, according to prosecutors.

Three other people previously pleaded guilty in the scheme.

The case is USA v. Belter, US District Court, District of New jersey, No. 2:20-mj-13401.

For the government: Assistant US Attorneys Nicole, Mastropieri, Hayden Brockett and Barbara Ward

For Laughlin: Aidan O’Connor and Joseph Hayden of Pashman Stein Walder Hayden

For Luke: Rebekah Conroy and Shalom Stone of Shalom Stone of Stone Conroy

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Brendan Pierson

Thomson Reuters

Brendan Pierson reports on product liability litigation and on all areas of health care law. He can be reached at brendan.pierson@thomsonreuters.com.

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