Feds take down $1 billion fraud scheme in 'Operation Brace Yourself'

Image: Sherri A. Lydon
United States Attorney Sherri A. Lydon Copyright NBC News
Copyright NBC News
By Adiel Kaplan with NBC News Politics
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An international telemarketing network lured hundreds of thousands of elderly or disabled patients into a criminal scheme, prosecutors said.


Two dozen people, including doctors and owners of medical equipment companies, were charged in a more than $1 billion global health care fraud scheme, authorities said Tuesday.

Investigators uncovered a sprawling plot that targeted elderly and disabled people by setting them up with back, neck and knee braces that they didn't need, according to federal prosecutors.

Billed Operation Brace Yourself, the investigation discovered that medical brace manufacturers were allegedly paying illegal kickbacks and bribes to doctors working with fraudulent telemedicine companies in exchange for Medicare patient referrals for medically unnecessary braces.

The ill-gotten gains were then laundered through international shell companies and used to buy exotic cars, yachts and luxury real estate in the U.S. and overseas, prosecutors said.

'White collar crime is not victimless," Sherri Lydon, U.S. attorney for the district of South Carolina, where the probe originated, said at a press conference announcing the indictments. "All taxpayers will endure the rising cost of health care premiums and out-of-pocket costs as a result of fraud on our Medicare system."

United States Attorney Sherri A. Lydon
United States Attorney Sherri A. LydonNBC News

Doctors were paid to prescribe braces to patients they had little to no relationship with. Prescriptions frequently came after doctors had a brief conversations via phone or video conference with patients they had never met, prosecutors said.

The global scheme involved call centers in the Philippines and throughout Latin America.

As a result, the personal information of hundreds of thousands of Medicare beneficiaries across the country was compromised and could be used in other, future schemes, prosecutors said. An even larger number of patients received unwanted braces in their home. The unwanted products could disqualify them from receiving a brace under Medicare if they need one in the future, prosecutors said.

The cases span 17 federal districts, including in New Jersey, Florida, Texas and California, and an estimated $1.2 billion in losses.

"These defendants — who range from corporate executives to medical professionals — allegedly participated in an expansive and sophisticated fraud to exploit telemedicine technology meant for patients otherwise unable to access health care," said assistant attorney general Brian Benczkowski of the Justice Department's Criminal Division

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