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WASHINGTON  — Federal authorities said Tuesday they’ve broken up a $1.2 billion Medicare scam that peddled unneeded orthopedic braces to hundreds of thousands of seniors via foreign call centers.

The Justice Department announced charges against 24 people across the U.S., including doctors accused of writing bogus prescriptions for unneeded back, shoulder, wrist, and knee braces. Others charged included owners of call centers, telemedicine firms, and medical equipment companies.


The Health and Human Services inspector general’s office said the fast-moving scam morphed into multiple related schemes, fueled by kickbacks among the parties involved. The FBI, the IRS, and 17 U.S. attorney’s offices took part in the crackdown. Arrests were made Tuesday morning.

Medicare’s anti-fraud unit said it’s taking action against 130 medical equipment companies implicated. They billed the program a total of $1.7 billion, of which more than $900 million was paid out.

Telemarketers would reach out to seniors offering “free” orthopedic braces, also touted through television and radio ads. Beneficiaries who expressed interest would be patched through to call centers involved in the scheme. Officials described an “international telemarketing network” with call centers in the Philippines and throughout Latin America.


The call centers would verify seniors’ Medicare coverage and transfer them to telemedicine companies for consultations with doctors.

“The telemedicine we are talking about is basically a tele-scam,” said Gary Cantrell, who oversees fraud investigations for the HHS inspector general’s office. “We are not talking about the use of advanced technology to provide better access to care.”

The doctors would write prescriptions for orthopedic braces, regardless of whether the patients needed them or not. In some cases several braces were prescribed for the same patient.

The call centers would collect prescriptions and sell them to medical equipment companies, which would ship the braces to beneficiaries and bill Medicare. Medical equipment companies would get $500 to $900 per brace from Medicare and would pay kickbacks of nearly $300 per brace.

The scam was detected last summer, officials said. Complaints from beneficiaries were pouring in to the Medicare fraud hotline, and some consumer news organizations warned seniors. As the investigation progressed, Cantrell said, federal agents gained cooperation from people familiar with the various schemes.

Officials said it’s one of the biggest frauds the inspector general’s office has seen. Charges were being brought against defendants in California, Florida, New Jersey, Pennsylvania, South Carolina and Texas.

“The breadth of this nationwide conspiracy should be frightening to all who rely on some form of health care,” IRS criminal investigations chief Don Fort said in a statement. “The conspiracy … details broad corruption, massive amounts of greed, and systemic flaws in our health care system that were exploited by the defendants.”

Health care fraud is a pervasive problem that costs taxpayers tens of billions of dollars a year. The true extent of it is unknown, and some cases involve gray areas of complex payment policies.

Experts say part of the problem is that Medicare is required to pay medical bills promptly, which means money often goes out before potential frauds get flagged. Investigators call that “pay and chase.”

In recent years, Medicare has tried to adapt techniques used by credit card companies to head off fraud. Law enforcement coordination has grown, with strike forces of federal prosecutors and agents, along with state counterparts, specializing in health care investigations.

The Medicare beneficiaries drawn into the orthopedic braces scam didn’t have to pay anything up front, but Cantrell said they have been harmed as well: A beneficiary’s private information, once in the hands of fraudsters, can be resold for many illegal purposes.

Additionally, if a beneficiary whose information was misused ever does need an orthopedic brace, he or she may encounter waiting periods from Medicare. The program limits how often it pays for certain supplies and equipment.

“It can be very attractive to receive equipment,” Cantrell said. “But after giving out your identifying information, it could be compromised to perpetuate additional fraud. There is no fraud without the ID number of a Medicare beneficiary.”

—Ricardo Alonso-Zaldivar

  • I believe I have been extremely the victim of insurance fraud in Arkansas, I had a woman try to sign me up for Medicaid when I was hospitalized last year and lost my insurance even though I refused the Medicaid, was supposed to be in a group therapy and had to miss because of her, lost my insurance. I use to have to wear a Boston back brace for two years prescribed by dr Ashley Ross I have been harassed for years in this state every time I get a job with insurance I harassed and lose it it was called a Harrington brace.

  • Just got a call from someone who called himself Sam Parker from the Medicare Pain Relief Center. Caller ID was: 954-370-2799. He said he knew that I have knee problems and he just needed a height and weight to fit me for a brace. He said he had my Medicare number. He would not give me a phone number for his company, but did offer to have their Pain Relief doctor call me.

  • Just received a call from Senior Medical. They called 4 or 5 times Monday and just as many yesterday. My husband told them not to call anymore and his reply was I’ll you tomorrow. Well he just called and I tried to get a phone number but he wouldn’t give it to me and he hung up. Sure will be glad when somebody does something about this. If the people that could do something had to answer their phone, things would change!

  • Just received another call from “Senior Medical” regarding Medicare Mobility Braces. When I asked the caller exactly what company she was with she told me I was a “f ‘ ing idiot” and told me to “f’off”. Well, so much for the Federal Government shutting them down. what a joke.

  • Just got a call today from an obvious call center (boiler room) saying they were from Medicare and they have identified me as a very good customer (yea right). Medicare was pleased to offer me free support for any pain i had. “Where do you have pain? in your knees? your lower back? shoulder?”. Knees. “Right or left?”. Both, but i don’t understand where this call is coming from? “Oh, I’ll talk slower”. yea, not what I meant. “How about your back do you have pain in your lower back when you stand up or any time?”. No. “How about your ankles?”. I hung up thinking they were just trying to bill Medicare for as many devices as they could get me to agree too. Well 20 minutes later they called back and now, of course, “Knew” i had pain in my knees and medicare was here to help. Free braces. I said I don’t need them and hung up and went to the web and found the scam almost immediately. The authorities may be all proud they broke up one but there must be more and it’s costing American Taxpayers Billions if not Trillions. Thank goodness Medicare might be expanded to everyone thus tripling the exposure for us all.

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