Despicable Medicare Fraud Telemarketing Scheme Claim Settles

We all hate telemarketers. If there is anything that worse than telemarketing, however, it is Medicare fraud. Combine the two and you have a company called Med-Care Diabetic & Medical Supplies, Inc., at least according to some of its former workers. Earlier this month, a multimillion dollar Medicare fraud case brought by those workers settled. Unfortunately, the details of the settlement have not been released.

Med-Care is a supplier of diabetic supplies. According to the complaint, it operated an illegal telemarketing scheme in an attempt to drum up business. “The telemarketing component of the [Med-Care’s] scheme uses boiler room telemarketing tactics to make prohibited, misleading, and unsolicited telephone calls from two call centers, one of which is located at … Med-Care’s facilities in Boca Raton, FL, and the other of which is located [in New York]”.

Any sales that result from telemarketing calls are not reimbursable by Medicare. There are a few narrow exceptions for existing patients but none of those exceptions apparently applied in this case. Med-Care simply cold-called prospects hoping to find diabetic patients. The complaint says that the telemarketers used a variety of deceptive practices hoping to get patients to purchase testing equipment and supplies from Med-Care. Their tactics included lying by claiming to be from Medicare, lying by claiming they were from a religious organization, lying by claiming the patient’s existing products had been recalled and telling patients they could get their diabetic products for free.

Another employee claimed she was told to say that she was calling on behalf of the “American Diabetic Association” or the “Christian Healthcare Network” or even the patient’s own physician!

The third whistleblower says his telemarketing trainer would tell patients, “Hello, my name is Mel. I’m with the Christian Healthcare Network. All my children are diabetics (which was false), and I’m volunteering here for free (which was also false).” He also claims the Boca Raton telemarketing call center where he worked routinely hired convicted felons and drug addicts.

If all else failed, the telemarketers would even offer Wal-Mart gift cards or iPads in order to get patients to order their diabetic testing equipment and supplies.

Lying to sell a product is obviously illegal. It is also Medicare fraud if the items being sold are billed to Medicare.

Federal Medicare rules don’t allow telemarketing. The feds believe that healthcare decisions should be made by the patient working with his or her doctor, not calls from boiler room salespeople with no medical training. Telemarketing often results in unnecessary billing and services or equipment that is medically unnecessary.

Federal law also prohibits kickbacks. Giving a patient an iPad in exchange for him or her switching suppliers or buying testing equipment can be considered a kickback. Under the federal Anti Kickback Statute, kickbacks are also considered Medicare fraud.

Medicare is funded with tax dollars. Ripping off Medicare is therefore not a victimless crime. You and I as taxpayers pay those bills.

If the story were to end here, it would be bad. But it gets worse. The three whistleblowers say that once Med-Care obtained a patient’s Medicare billing information, the real fraud would begin. Patients were sent more supplies than were ordered. Patients were also sent drugs that were soon to expire so that they would have to reorder. And often Med-Care would also send patients nebulizers, CPAP machines and back braces. If they could bill a device to Medicare, they sent it. In almost all these cases, no physician had requested the equipment or certified that it was medically necessary.

And who is behind this company? The whistleblowers say a doctor named Steven Silverman. Instead of helping patients, it appears Dr. Silverman was busy lining his pockets. The three whistleblowers say that Med-Care had developed such a bad reputation that Silverman was hauled before Congress in 2013 and subpoenaed to testify about the company’s Medicare billing practices. (They say he lied to Congress as well.)

Another insider, Daniel Porush, has ties to the recent movie Wolf of Wall Street. An Inside Edition article says Porush is living like a King in a $7.5 million condo and driving a Rolls Royce (despite owing victims $190,000,000.00).

False Claims Act and Medicare Fraud

The three whistleblowers all filed their claims under the federal False Claims Act. Two of the three were employed by Med-Care. The third worked for a contract telemarketing agency that made cold calls for Med-Care.

Although their testimony was probably enough, the whistleblowers in this group were highly motivated. Prior to filing their complaint, they conducted “trash pulls” to gather more evidence.

Under the False Claims Act, a healthcare provider that defrauds Medicare can be liable for triple damages and penalties of up to $11,000 per each false claim submitted for payment.

Whistleblowers who are first to file can receive an award of up to 30% of whatever the government collects from the wrongdoer. In order to file, the whistleblower needs inside information about the fraud. Unsolicited telemarketing calls and the payment of kickbacks can qualify as Medicare fraud and thus be eligible for awards.

This case is somewhat unusual in that the terms of the settlement have not been released.

Anyone who watches late night TV has probably viewed commercials for diabetic supplies, catheters and even scooters. (Remember the Scooter Store ads?) Marketing so-called durable medical equipment isn’t illegal. Problems occur, however, if the ads are deceptive or if the supplier wants to bill taxpayers (Medicare) for the products.

If you have inside information about these practices, give us a call. Being the first to report not only makes you eligible for an award but it often saves lives. For example, one of the whistleblowers in this case said that Med-Car would send nebulizers to patients that were already prescribed an inhaler. In the event of an asthma attack, use of the wrong device could be very harmful or even fatal.

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Some people tell us they never came forward because they worried about the cost of filing a False Claims Act lawsuit. Don’t worry! We advance all costs and you never owe us for legal fees or costs unless we recover money for you.

Interested in learning more? Visit our Medicare fraud whistleblower page. Ready to see if you qualify for a reward? Give us a call. For more information, contact attorney Brian Mahany at or by telephone at (414) 704-6731 (direct). All inquiries are considered confidential.

MahanyLaw – America’s Medicare Fraud Whistleblower Lawyers