Busted: the top healthcare fraud schemes of Q4 2019

From retired NFL players to healthcare service owners and employees, fraud knows no socioeconomic boundaries among the accused. The most prominent fraud busts of the fourth quarter of 2019 include a $2.1 billion-plus genetic testing fraud scheme and a $127 million Medicare fraud and illegal kickback scheme. With help from the National Health Care Anti-Fraud Association (NHCAA), we’ve rounded up some of the top healthcare fraud allegations reported from October through December of 2019.

HHS OIG: $5.9B recovered during 2019 in healthcare fraud investigations

Thanks to a fruitful partnership with the Department of Justice and investigating newer areas of healthcare corruption (such as genetic testing and telemedicine), the Office of Inspector General (OIG) recovered $5.9 billion from fraud investigations during fiscal year 2019, according to its semiannual report to Congress, doubling last year’s total. This included a $700 million settlement against a pharmaceutical company for deceptive marketing claims about an opioid treatment drug.

South Carolina genetic testing scheme: $2.1 billion

A man from Hilton Head is accused of fraudulently billing Medicare for more than $56 million and being involved in a larger $2.1 billion-plus genetic test fraud scheme that “capitalized on the fears of elderly Americans in order to induce them to sign up for unnecessary or non-existent cancer screening tests.” The scheme also targeted physicians by coercing them to authorize the unnecessary tests.

Pennsylvania Medicare kickbacks: $127 million

An owner of two genetic testing laboratories is facing multiple charges for allegedly billing Medicare for $127 million for genetic tests at his labs using DNA samples that were erroneously collected by marketers and at health fairs using cheek swab kits. The man is said to have paid kickbacks to the marketers and to a telemedicine company that allowed him to obtain fraudulent prescriptions.

Tennessee pain clinic bust: $38 million

Several men from Tennessee and one man from Mississippi are accused of conspiring together in a $38 million-plus healthcare fraud scheme centered around Pain MD, a business that operated pain and wellness clinics. The businesses are accused of submitting false claims to Medicare, using scare tactics, and pushing aggressive productivity goals on providers to get them to provide more services to patients, including injections and durable medical equipment (DME), regardless of whether those services were necessary.

Wyoming youth treatment center scheme: $8.6 million

Three men who worked at Northwest Wyoming Treatment Center are said to be involved in an $8.6 million fraud scheme by submitting questionable claims to Medicaid for substance abuse treatment services provided to young people from April 2009 to August 2016. The nonprofit is reported to have billed Medicaid for time spent as substance abuse treatment even when there was no licensed therapist working with the youth, as well as inaccurately upcoding some group activities as higher-paying individual therapy treatment. They are also alleged to have billed leisurely activities, including playing video games, as therapeutically necessary substance abuse treatment.

New York health insurance fraud: $4 million

Accused of using photocopied physician signatures and promising free medical supplies at state-sponsored PR events, a former surgeon was indicted on 26 felony counts of defrauding a plan that provides health insurance to state workers. He is accused of illegally operating a medical supply company using his relatives’ names to avoid detection, falsifying insurance claims, forging prescriptions, and other illegal activity to get more than $4 million over a span of at least five years. He lost his license to practice medicine in 2000.

NFL health insurance scam: $3.9 million

Ten retired NFL players, including former Washington Redskins star running back Clinton Portis, were charged for allegedly submitting phony healthcare claims seeking to be reimbursed by the league’s retiree health plan for expensive medical equipment that was never purchased. Several players were also charged with wire fraud, with some supposedly impersonating other players over the phone to obtain confidential claim information. The scheme, investigated by more than 20 FBI field offices, occurred between June 2017 and December 2018 and resulted in more than $3.9 million in fake and fraudulent claims.

South Dakota, Iowa home healthcare bust: $3.1 million

Five home health providers located in Iowa and South Dakota allegedly submitted false claims to Medicare for therapy services billed by a third-party that did not qualify for Medicare coverage and were not medically justifiable or necessary for the patients. A consent judgment was entered by a federal court against the companies for submitting the fraudulent claims to Medicare from January 2012 to December 2015.

Building an effective fraud, waste, and abuse (FWA) investigation to catch schemes such as those we’ve described requires extensive data analysis. Download our FWA checklist for valuable time-saving tips to help you find patterns that could indicate inappropriate billing.

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Warren Lesnefsky
As vice president of product marketing, Warren Lesnefsky is responsible for the go-to-market planning and execution of Cotiviti's Payment Accuracy solutions. He brings 20 years of healthcare marketing experience in leading cross-functional teams to successfully launch information technologies and analytic services to the payer and provider markets. Prior to joining the organization in 2015, Warren held various marketing management roles at McKesson Health Solutions with a wide range of responsibilities covering events management, marketing communications, and product marketing.

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