Jennifer Trussell, Anti-Fraud Consultant with the State Health Insurance Assistance Program explains different fraud schemes that have affected each part of the Medicare program.  Jennifer also explains what law enforcement actions are being taken against these criminals!

The Rise of Robocalls Hits
Government Programs

Jennifer Trussell, Anti-Fraud Consultant

“The Rise of the Robocalls” sounds like the title of an action-packed movie playing at a theater near you.
However, the opening scene is eerily familiar to something you may experience daily. The phone rings and the
caller ID shows an area code and prefix similar to yours. You answer the call thinking it is someone you know.
Instead, you hear a brief pause and a virtual telemarketer named “Anna” informs you that you’ve missed the
Medicare Open Enrollment Period (OEP) and should press No. 2 to avoid a financial penalty.

If you find telemarketing robocalls as annoying as seasonal allergies, you are not alone. The Federal Trade
Commission (FTC) received over 5.7 million live telemarketing calls and robocall complaints in FY 2018 – more
than double the 3.2 million in 2014

For seasoned fraud fighters, the rise of the health care robocalls has been an interesting mini-series to watch.
First came the friendly salesperson at the mall kiosk selling mobility scooters (supported by television ads
featuring celebrity endorsements). Then came the mailers offering portable oxygen equipment to help seniors
live life on the go. Within a few years came online advertisements for discount prescription drugs, later
transitioning to social media advertisements for internet pharmacies.

And then it happened. It was as if the virtual robocallers became self-aware and flooded the phone lines with promises of miracle pain creams, free back braces, and an impressive monthly income simply for selling unused diabetic test strips. Unfortunately, the robocalls were a gateway to something much more effective: live telemarketers. The scooter salesperson at the mall could now reach hundreds per day by simply sending out robocalls and connecting to a vulnerable senior if they pressed No. 2 to speak to a representative.

Telemarketing Fraud Across the Medicare Spectrum

There is a wide variety of telemarketing fraud that infiltrates multiple areas of consumer goods and services.
Fraudulent telemarketing calls have been associated with housing and education loans, new credit cards, and
the sale of precious metals (such as gold). Government-sponsored programs, including Medicare and Medicaid,
have been a particularly attractive target for criminals – possibly because of the sheer volume of eligible
beneficiaries and the speed in which claims are paid.

Telemarketing schemes – whether for medically unnecessary services or for the more nefarious purpose of
medical identity theft – can be seen across the spectrum of health care services. In Medicare, it spreads across
the alphabet. In Medicare Part A, seniors receive scam calls regarding collection services for hospital bills
purportedly unpaid by Medicare. The fraudsters use social engineering to convince vulnerable seniors that
they failed to pay a small bill (perhaps $82.47 for inpatient laboratory services to give it the air of legitimacy)
and can avoid significant penalties by paying it immediately via phone. Seniors who fall victim to this scam
are often subjected to financial and medical identity theft. The telemarketing schemes in Medicare Part B

may include diagnostic tests attractive to seniors looking for answers to their current health conditions. SHIP and SMP programs across the nation are currently reporting a significant increase in solicitations for medically unnecessary genetic screening and diagnostic laboratory tests. In Medicare Part C, seniors have been inundated with fraudulent telemarketing calls regarding low-cost Medicare supplement plans – only to find their medical and financial identity compromised (without enrollment in a legitimate Part C plan).

Medicare Part D, and the prescription drug services associated with it, has been a frequent target of
telemarketing fraud. In 2016, the U.S. Department of Health & Human Services – Office of Inspector General
(HHS-OIG) published an eye-opening report that called attention to significant growth in spending for
compounded drugs (customized medications tailored to meet the needs of individual patients). HHS-OIG found
that Medicare Part D spending for compounded drugs grew by 625 percent from 2006 to 2015, including safety
and effectiveness concerns. The report broadly referenced ongoing enforcement work related to compounding
drug fraud, some of which involved telemarketing.

In one case, the Department of Justice (DOJ) issued a press release regarding a pharmacist and co-conspirators who
ran a nationwide telemarketing/telemedicine scheme in which there was no real patient-prescriber relationship
or actual patient care. Total payments made by Medicare, TRICARE, and Medicaid in connection with the
compounding scheme totaled nearly $5 million. The pharmacist was sentenced to six years in prison and ordered
to pay over $4.9 million in restitution (jointly and severally), and received a forfeiture judgment of $244,134.

In other areas of Medicare, beneficiaries are receiving unsolicited calls for home health and medical
transportation services. Some seniors are enticed with the telephonic offer of free housekeeping services
under a “new” Medicare program known as hospice. Some seniors who need adult day care solutions
as they age are deceived into enrolling in community mental health centers or other types of medically
unnecessary psychiatric care. Still others fall prey to the social engineering skills of durable medical equipment
(DME) marketers with the promise of new back braces and foot orthotics – at “no charge” to the Medicare
beneficiary. The list goes on. Health care-related robocalls and telemarketing are on the rise because they
work. Seniors are more likely to make purchases by phone and are often more comfortable with interacting with a live operator as opposed to making online purchases. In fact, the National Council on Aging lists telemarketing and phone scams as on the of Top 10 Financial Scams Targeting Seniors.

Enforcement Action

As the rate of telemarketing fraud rises, so has the enforcement efforts of the law enforcement officers on
the front lines. In August 2016, Sundae Williams, the owner of Serenity Marketing and Serenity Living LLC,
was sentenced to one year in federal prison for a telemarketing and kickback scheme involving home health
services. Williams and her staff were trained to cold call Medicare beneficiaries and convince them to accept
home health services. They then provided that information to home health agencies that had agreed to pay
Serenity for the referrals.

In July 2018, the DOJ announced that Timothy Thomas was sentenced to 66 months in prison for fraudulent marketing and misrepresenting health insurance plans. Thomas and his sales staff misrepresented health insurance products to consumers through telemarketing using “misleading, high-pressure sales tactics to dupe thousands of victims into buying a product that they mistakenly believed was just as good as major
medical health insurance,” according to U.S. Attorney Don Cochran. In fact, the limited benefit health plans left customers with the vast majority of the financial risk. Thomas was additionally ordered to forfeit $1.5 million and to pay more than $2.5 million in restitution to the victims of the fraud scheme.

One of the largest health care fraud schemes prosecuted by the DOJ to date is related to telemarketing. Last month, the DOJ announced federal indictments and other enforcement actions against 24 individuals regarding a DME/telemarketing scheme involving more than $1.2 billion in losses. The individuals included CEOs and other executives associated with five telemedicine companies, dozens of DME companies,
and three licensed medical professionals. The scheme involved an international telemarketing network that lured over hundreds of thousands of elderly and disabled patients into a scheme to receive DME equipment after only a brief telephone conversation with a clinician they had never met or seen. The press release also indicates that kickbacks and bribes by the international call center and DME companies were made in
exchange for patient referrals, and telemarketers “up-sold” beneficiaries to get them to accept medically unnecessary free or low-cost DME braces. The scope and complexity of this scheme should remind everyone that telemarketing fraud in health care should be taken seriously.

A case to watch involves another telemarketing scheme with over $1 billion in exposure. In October 2018, the District Court for the Eastern District of Tennessee unsealed a 32-count indictment charging four individuals and seven companies in a $1 billion health care fraud scheme. The press release describes a sophisticated scheme in which two telemarketing companies fraudulently solicited insurance information and prescriptions from consumers across the country for prescription pain creams and similar products. It is alleged that
physicians in this case approved prescriptions without knowing that the defendants were significantly marking
up the prices of the drugs, which were later billed to private insurance carriers. Each of the companies are
also charged with conspiring to commit wire fraud and using their telemarketing facilities to fraudulently sell
millions in products such as weight loss pills, skin creams, and testosterone supplements.

Coming Soon to a Theater Near You?

Numerous agencies, in addition to enforcement efforts by HHS-OIG and the FBI (Federal Bureau of Investigation), are involved in combatting this fraud trend. Take, for example, the FTC. As referenced at the beginning of this article, the FTC publishes an annual report listing the number of complaints related
to the Do Not Call Registry. Law enforcement officials review these complaints (as well as consumer registration and telemarketer access information) through the Consumer Sentinel Network, a secure online database maintained by the FTC. More information about the FTC’s work can be found here. The Federal Communications Commission (FCC) is also engaged in fighting robocall-related fraud, including spoofed caller ID scams. The FCC recently published a report to showcase their efforts through enforcement, policy, and
regulatory improvements as well as partnerships with public and private stakeholders. In addition to privacy and security improvements through biometrics and new algorithms, major cellular carriers are making efforts to upgrade the technology that tracks call volume from a single line.

From a congressional standpoint, telemarketing and associated fraud schemes have had the attention of Congress for some time. The Telephone Consumer Protection Act (TCPA) was passed in 1991 and was updated in 2012. The TCPA regulates telemarketing and auto-dialed calls and granted the authority to create the National Do-Not-Call List. Congress continues to show interest in this issue as evidenced by several recent
hearings and bills targeting this fraud trend.

Hopefully “Robocallers: Endgame” is coming soon to a theater near you!