Operation Brace Yourself: A Look at the Data
Operation Brace Yourself, the Department of Justice’s 2019 effort to combat massive fraud in durable medical equipment, has gotten much attention and generated many press releases. Still, I thought it would be helpful to look at the underlying Medicare data, which I’ve extensively done in prosecuting and defending health care fraud cases. This will help show the problem that the government tried to address and some issues that attorneys and healthcare professionals should consider.
First, Operation Brace Yourself was a response to a problem that grew to staggering amounts over several years.
According to my review of Medicare data, no doctors or medical professionals anywhere in the country ordered huge amounts of prosthetics or orthotics (at least $1 million) until 2015. That year, for the first time, two providers each ordered more than $1 million of POS—I’ll call them “high-volume POS referrers.”
This was unusual. One of these high-volume POS referrers treated less than 200 Medicare beneficiaries that year while ordering POS for more than 1,500. In other words, he was ordering POS for hundreds of patients whom he probably had never even seen or treated.
And the number of such high-volume POS referrers went up year after year. By 2018, about 170 Medicare providers ordered more than $1 million of POS that year, with about 24 ordering more than $5 million each (including one doctor who ordered more than $15 million), according to billing data.
This was a huge change in billing patterns—a very concentrated amount of POS orders from physicians who often had not ordered much in POS beforehand. Some of these physicians were in specialties that ordinarily would not be associated with ordering large amounts of expensive back braces and knee braces.
There were many family practitioners, many nurse practitioners, some OB-GYNs, an ENT (ear, nose, and throat doctor), and even a psychologist and a psychiatrist. Many of these doctors and practitioners ordered braces for thousands of patients (based on data submitted by DME suppliers) while actually treating a much smaller number of patients (based on the Part B data submitted by the doctors and practitioners themselves).
These are massive red flags in the data, and the Operation Brace Yourself cases explain what was going on. As we now know from the publicly filed documents, many of these doctors participated in schemes involving “telemedicine.” However, “telemedicine” here was unlike the virtual visits many of us used because of the pandemic.
In everyday situations involving DME, the doctor treats the patients and orders DME as part of the patients’ overall care. But here, the doctor was not the primary decision-maker, often had no prior relationship with the patients, and often had little if any interaction with the patients - sometimes just a telephone call. In the cases that the government calls “telemedicine” cases, businesspeople and marketers are the main drivers of the process, and doctors often sign off on expensive orders based on minimal patient information and often without fully understanding what is going on.
The diagram below shows how a prosthetics order should work in normal circumstances. A patient goes to a doctor, the doctor places an order to a supplier, and the supplier bills Medicare for the DME that the patient receives and uses.
The following diagram shows how prosthetics orders in the Brace Yourself cases came about. According to the claims submitted to Medicare, everything worked as usual.
But in reality, patients were recruited by call centers, a doctor who had little to no interaction with a patient signed orders for braces, and a broker sold the patient information and those signed orders to suppliers who then billed Medicare for expensive items that patients often did not need or even use.
Overall, this is a complex system set up to defraud Medicare by billing for unnecessary items in ways that appear legitimate.
Many of these cases involve some telephone contact with a doctor. Still, it’s more beneficial to consider these cases as “doctor-enabled” healthcare fraud, in contrast to classic healthcare fraud schemes where the doctor drives the fraud. Based on my experience, what the government calls “telemedicine” fraud is just a slight evolution of similar schemes in other areas such as home health, hospice, and genetic testing – all cases where the doctor enables the fraud rather than driving the fraud. “Telemedicine” focuses on one delivery system rather than the more significant problem.
Whatever you call it, all of this had enormous consequences on Medicare.
In 2018 alone, Medicare spent almost $500 million on POS ordered by these high-volume POS referrers. From 2015 to 2019, Medicare paid over $1.1 billion on POS allegedly ordered by these people.
Second, Operation Brace Yourself does appear to have had a significant impact on the problem.
The government charged and arrested multiple people in April 2019, and the charges appear to explain a significant drop-off in activity over the entire year. The number of providers responsible for more than $1 million of POS dropped, and Medicare spending on POS for those high-volume referrers dropped by about 30 percent. I’ve heard one government official say there was a $2 billion decrease in spending in the 18 months after Operation Brace Yourself, a sign of how big the problem had gotten and how much it would have cost Medicare had the problem continued.
Third, the government has charged and convicted several doctors who ordered large amounts of POS.
According to Medicare data, as of June 2022, several doctors who have been charged and convicted are listed below, along with the amounts of POS they ordered.
Dr. Kenneth Pelehac was charged in 2022, pled, and agreed to cooperate, but has not yet been sentenced—total Medicare POS payments of more than $17 million.
Dr. Ravi Murali - charged in 2020, pled and sentenced to 54 months imprisonment—total Medicare POS payments of more than $13 million.
Dr. Randy Swackhammer - began cooperating with the government in early 2019 (while Operation Brace Yourself was still a covert operation) and made recordings of others. Charged in 2019, pled, cooperated, and sentenced to probation—total Medicare POS payments of over $7 million.
At least two high-volume referrers who were charged are set for trial in late 2022.
At the same time, as of June 2022, most high-volume referrers, including some doctors with very high POS payments associated with them, have not been charged.
For example, according to data, the doctor who ordered the most POS ($24 million in total, including a staggering $17 million in just 2019 alone) has not been charged with a crime as of June 2022. According to data, she treated about 400 patients in 2019 while ordering POS for thousands of patients she never treated – more than 8,000. I assume the government has looked at this doctor, who probably got involved with “telemedicine” because she was in bad shape financially - she filed for bankruptcy in early 2019 and mentioned her work in “telemedicine” in her bankruptcy petition. Whether she gets charged will probably depend on whether the government can prove that she knew that her conduct was illegal.
Fourth, these doctors appear to have made relatively little from their involvement compared to the DME suppliers.
According to publicly filed documents, several doctors who have been charged made $20 to $40 per order they signed. In one example, the doctor made $30 for authorizing a knee brace for a patient he had never met or spoken to, while the DME company was paid more than $300 for that brace. Plea agreements with two doctors show that the doctors made less than $200,000 each for their parts in the overall crime, while Medicare paid millions of dollars to the DME suppliers who used the doctors’ orders.
In contrast to some of these doctors, some patient brokers and DME suppliers who have been charged and convicted as part of Operation Brace Yourself reportedly made far more money. In one case, two people were sentenced to more than 12 years in prison for a scheme that allegedly resulted in more than $27 million of Medicare payments, including millions that the defendants transferred overseas. Another man was sentenced to 15 years in prison for selling patient information; he notably engaged in this conduct before Operation Brace Yourself and continued the conduct even afterward.
So what can attorneys and health care providers take from all this?
First, there is a lot of data out there, both publicly and privately, and people should get a better handle on the data sooner rather than later. Many of the high-volume referrers probably had no idea how much money was being spent under their name and how easily the data pointed to them, and they probably would have withdrawn quickly. They could have avoided prosecution if they had known. Some of these doctors might have been the victims of identity theft, and a closer look at their data might have caught that, too.
If a doctor has already been charged, it may be helpful to know how the doctor compares to his or her peers. Such comparative data may help position the doctor better, at least for sentencing, especially when it is clear that many people have not been charged for what seems like similar conduct.
Second, many doctors who ordered large amounts of POS were in fields not generally associated with prosthetics or orthotics. Some of these doctors probably thought this work was a way to supplement their income without realizing the massive risks they were taking by getting involved in unfamiliar areas. Doctors should be careful when switching fields or going outside their specialties and not just rely on what their employers tell them.
Third, the government has to prove “willfulness” to prosecute someone for health care fraud or kickbacks – basically, the government has to prove that people knew that what they were doing was illegal and did it anyway. That can be difficult when the doctors have little knowledge of the overall system and receive relatively small payments. If a doctor were naïve, careless, or gullible, the doctor would not have the “willfulness” necessary to be convicted of healthcare fraud. This might explain why many high-volume referrers have not been charged with a crime.
At the same time, the government can prove willfulness more easily when fake documents are used, such as when businesspeople or DME suppliers try to make payments to doctors look like “marketing” expenses, indicating that they know that the payments violate the Anti-Kickback Statute.
Doctors involved with DME or other high-risk areas can alert themselves to potential “doctor-enabled” healthcare fraud by asking a few questions.
Do you know where your patients came from? Are your patients reaching out for help, or have marketers solicited them?
Are you treating the patient or just ordering one or more particular items or services that you would not order in your typical practice?
Is everything true before you sign if you are given forms or EMRs to fill out? If not, this could be a red flag for fraud.
How are you getting paid? Are your services being billed to a patient’s insurance, or are they effectively tied to your ordering another service or item? If the latter, your payments could be seen more like a kickback.
The Stephen Lee Law legal blog covers various topics, including healthcare fraud defense, investigations, data analytics, and the federal anti-kickback statute.
For further insights into Operation Brace Yourself or legal guidance on healthcare fraud defense, please contact Stephen Lee Law.
