Veritas Medical Solutions LLC and a network of affiliated durable medical equipment companies were charged with a scheme to defraud Medicare by paying physicians to sign authorization orders for orthotic braces — including back, knee, shoulder, and wrist supports — that beneficiaries had not requested, did not need, and in a significant number of documented cases never received. The scheme generated tens of millions of dollars in false Medicare claims during the period covered by the complaint.DOCUMENTED
Durable medical equipment fraud involving orthotic braces has become one of the most prevalent Medicare fraud categories identified in federal enforcement actions over the past decade. The basic scheme exploits the fact that Medicare covers prescribed orthotic devices when ordered by a treating physician who has established a patient-provider relationship and determined through clinical examination that the device is medically necessary. Fraudulent operations in this space typically circumvent those requirements by purchasing signed orders from physicians who have never met the beneficiary, relying on telemarketing operations to generate beneficiary information, or in the most extreme cases fabricating orders entirely.REVIEWED
- Tens of millions of dollars in false Medicare claims for orthotic braces during the charged period
- Physicians paid per-signature for orders without conducting examinations required by Medicare coverage rules
- Telemarketing operations used to solicit Medicare beneficiary contact information and implied consent
- Significant number of billed beneficiaries received either a lesser-quality item than billed or no item at all
- Multiple company principals face criminal referral alongside the civil False Claims Act resolution
The Physician Order Network
The complaint alleges that Veritas Medical Solutions built its business model around purchasing physician signatures on pre-prepared order forms. The company contracted with a network of telemedicine physicians who would review a brief summary of a beneficiary's self-reported symptoms — often gathered through a telemarketing call — and sign a standardized order form for an orthotic brace without conducting a clinical examination, without reviewing prior treatment records, and without establishing a genuine treating relationship with the patient.DOCUMENTED
Medicare's coverage rules for durable medical equipment require that an order be signed by the treating physician, meaning the physician who has evaluated the patient and determined that the item is medically necessary in the context of an ongoing treatment relationship. Telemedicine encounters can satisfy that requirement under certain conditions, but regulators found that the encounters facilitated by Veritas did not meet those conditions — the physicians were reviewing summary data prepared by the company rather than conducting genuine clinical assessments, and the compensation structure paid them per order signed rather than per hour of clinical service, creating a direct incentive to approve orders rather than to exercise independent clinical judgment.DOCUMENTED
Telemarketing and Beneficiary Recruitment
The scheme required a steady supply of Medicare beneficiary information to generate billable orders. Veritas operated or contracted with telemarketing companies that called Medicare beneficiaries with scripts designed to elicit expressions of interest in receiving a free or low-cost brace, implying that the brace had been prescribed by the beneficiary's own doctor or that it would be paid for entirely by Medicare with no cost to the beneficiary. The calls gathered enough information to complete a beneficiary profile that would then be transmitted to a network physician for an order.DOCUMENTED
In several documented instances, beneficiaries later told investigators that they had not understood themselves to be requesting a brace, had believed the call was from their own physician's office or from Medicare directly, or had expressed general interest without understanding that a Medicare claim would be filed in their name. Medicare fraud investigators found patterns in the beneficiary data consistent with systematic abuse — many of the beneficiaries whose names appeared in Veritas claims had no primary care relationship with the ordering physician, lived far from any facility associated with the physician, or had prior Medicare records inconsistent with the conditions the orders cited as clinical justification.DOCUMENTED
Beneficiaries interviewed by investigators described receiving items they had not requested and being billed amounts they had not been told to expect — in some cases the brace arrived by mail without any prior contact from a physician or the company's customer service function.
Items Billed Versus Items Delivered
The complaint includes findings from a review of a sample of Medicare claims submitted by Veritas against beneficiary records and postal delivery documentation. The review found that in a meaningful percentage of cases, the item actually shipped was a lesser grade of brace than the item billed — for example, a prefabricated off-the-shelf support billed at the rate for a custom-fitted orthotic — and that in some cases no item was delivered at all, with claims nonetheless submitted to Medicare within normal billing windows.DOCUMENTED
Medicare pays materially different rates for custom and prefabricated orthotics, with custom-fitted devices carrying significantly higher reimbursement. Billing for a custom device while shipping a prefabricated one constitutes a separate category of fraud independent of the order solicitation issues, compounding the company's liability under the False Claims Act.REVIEWED
Individuals who received unsolicited medical equipment, received calls implying Medicare coverage for equipment they did not request, or have information about similar durable medical equipment operations are encouraged to contact Watchdog Journal at /tips or the HHS OIG fraud hotline.
National Enforcement Context
The Veritas Medical Solutions case reflects a continuing pattern of federal enforcement against durable medical equipment fraud involving orthotic braces. The brace fraud category surged as Medicare expanded coverage for orthotics and as telemarketing technology enabled schemes to reach large numbers of beneficiaries at low cost. The Department of Justice has charged dozens of durable medical equipment suppliers and their principals in connection with brace fraud schemes, with some cases resulting in criminal convictions and sentences for individuals who operated the schemes. The schemes share a common structure: a telemarketing operation generates beneficiary contact information and implied consent, a network of physicians sign orders without examining patients, and a DME supplier bills Medicare for equipment at the highest applicable billing code. Federal investigators have increasingly targeted the physician networks and telemedicine platforms that provide the orders as well as the DME suppliers who submit the claims, recognizing that both elements of the scheme are essential to its operation.
Sources behind this report
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