CEO of telemedicine company pleads guilty to Medicare fraud in $424 million scheme

Telemedicine CEO Lester Stockett has pleaded guilty for his role in what the U.S. Department of Justice has called one of the largest healthcare fraud schemes ever investigated by the FBI and the Department of Health and Human Services.

Stockett, 52, of Medellin, Columbia, was the owner of two companies collectively operating under the name of Video Doctor Network -- Video Doctor USA and Telemed Health Group, or AffordADoc. He was also CEO of AffordADoc.

Stockett pleaded guilty to one count of conspiracy to defraud the United States and pay and receive healthcare kickbacks, and one count of conspiracy to commit money laundering, according to the DOJ.

Stockett was one of 24 telemedicine executives, physicians and medical device company executives who were charged by the DOJ in April for a complicated scheme to defraud Medicare, with a resulting $1.2 billion in losses.

The companies involved in the scheme allegedly bribed and provided kickbacks to telemedicine company physicians in exchange for referrals for medically unnecessary back, wrist, knee and shoulder braces. All told, more than $1.7 billion was billed to Medicare, and about $900 million was ultimately paid out.

WHAT'S THE IMPACT

In connection with his guilty plea, Stockett admitted that he and others agreed to solicit and receive illegal kickbacks and bribes from patient recruiters, pharmacies, brace suppliers and others in exchange for arranging for doctors to order medically unnecessary orthotic braces for beneficiaries of Medicare and other insurance carriers.

The beneficiaries were contacted through an international telemarketing network that lured hundreds of thousands of elderly and/or disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and throughout Latin America.

Stockett admitted that, in order to obtain the orders that were transmitted in exchange for kickbacks and bribes, he and other executives and employees of the Video Doctor Network paid illegal kickbacks and bribes to healthcare providers to order the medically unnecessary braces. Many of these orders were written after only a short telephone call between the provider and the beneficiary; the provider had not established a prior doctor-patient relationship.

Stockett and others transferred the brace orders to co-conspirator brace suppliers to support more than $424 million in false and fraudulent claims to Medicare that were submitted by brace suppliers, he told federal agents. Medicare paid these brace suppliers in excess of $200 million for these claims.

He and other executives at his company also defrauded investors who had assumed the company's legitimacy. Stockett also admitted to domestic and international money laundering. Specifically, he and his co-conspirators transferred about $10 million in illegal kickback payments that they received to the bank account of Droneza Consulting in the Dominican Republic. They then transferred more than $9.8 million from the Droneza Consulting account to bank accounts of AffordADoc in the U.S. to conceal that the Video Doctor Network was receiving kickbacks from brace suppliers.

As part of the plea, Stocket agreed to pay $200 million in restitution. Indictments against the other telemedicine executives are still pending.

THE LARGER TREND

In April, when news of the larger scheme first broke, the Centers for Medicare and Medicaid Services Center for Program Integrity (CMS/CPI) also announced that it took adverse administrative action against 130 durable medical equipment companies charged in the plot.

Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com