DOJ Targets Telemedicine Companies for Additional False Claims Act Recoveries

At a Glance

• In February 2024, DOJ touted 2023 as the year it secured the “highest number of [False Claims Act] settlements and judgments in history” and identified the health care industry as the “leading source” of the government’s False Claims Act revenue.
• As 2024 has progressed, DOJ has set its sights on telemedicine as a ripe source for additional criminal prosecutions and False Claims Act activity.
• Looking ahead, a potential new frontier for DOJ enforcement actions in the telemedicine sphere may involve telemedicine companies hocking compounded versions of popular glp-1 weight loss drugs, which are in short supply.

Telemedicine, which has been a fertile source of criminal prosecutions for federal prosecutors in recent years, is increasingly generating federal False Claims Act cases. This development is hardly surprising as the U.S. Department of Justice (DOJ) continues to focus on the health care industry under the False Claims Act. In February 2024, DOJ touted 2023 as the year it secured the “highest number of [False Claims Act] settlements and judgments in history” and identified the health care industry as the “leading source” of the government’s False Claims Act revenue. In 2023, the “health care fraud” category accounted for more than $1.8 billion of the government’s $2.68 billion in False Claims Act settlements and judgments. It is within this high-dollar recovery setting that we entered 2024.

2024: Telemedicine False Claims Act Prosecutions

As 2024 has progressed, DOJ has set its sights on telemedicine as a ripe source for additional criminal prosecutions and False Claims Act activity. Attorney General Merrick Garland identified a DOJ priority as “addressing the rise of schemes that exploit telemedicine technology.” DOJ brought criminal charges against the former CEO and the clinical president of digital health company Done Global Inc. for their involvement in an alleged $100 million scheme that used telemedicine providers to prescribe and distribute more than 40 million Adderall pills and other stimulant drugs to patients without a medical need for them.

Earlier in 2024, Daniel Hurt, the owner of multiple health care companies, entered a settlement agreement with DOJ to resolve several allegations of wrongdoing, including that he conspired with telemedicine providers to violate the False Claims Act. These telemedicine companies prescribed medically unnecessary cancer genomic tests to Medicare beneficiaries. The $27 million settlement resembled a 2023 criminal matter involving a $463 million scheme, in which the owner of a laboratory company conspired with telemedicine companies to obtain physician authorization for Medicare beneficiaries to receive medically unnecessary genetic cancer tests.

What’s Next for Telehealth Prosecutions?

Looking ahead, a potential new frontier for DOJ enforcement actions in the telemedicine sphere may involve telemedicine companies hocking compounded versions of popular glp-1 weight loss drugs, which are in short supply. As telehealth grows and evolves, it will likely become a more regular feature of DOJ False Claims Act enforcement, not just criminal prosecutions.