Telehealth Providers Must Beware Of Fraud, Criminal and Civil Liability As Industry Grows

September 23, 2021Articles

Law360 published an article this week by Dinsmore health care attorney LaTawnda Moore about an ongoing scheme made possible by the increasing prevalence of telehealth during the COVID-19 pandemic. This scheme is putting telehealth executives and health care providers at risk of criminal and civil liability. An excerpt is below.

The telehealth executives pay health care providers for prescriptions. Then, they sell these prescriptions to pharmacies, laboratories or medical equipment companies who bill the Centers for Medicare & Medicaid Services for often unneeded items.

The health care providers are being paid to order unnecessary prescriptions, either without patient interaction or with only a brief telephonic conversation with patients they have never met or seen. Both the telehealth executives and the health care providers have criminal and civil liability in this scheme. A recent $784 million felonious scheme highlights this point.


While gifts or rewards for business referrals may be commonplace in some industries, those offers and payments may be criminal in health care. The Anti-Kickback Statute prohibits quid pro quo arrangements, such as bestowing a benefit or favor or anything else of value in exchange for a referral.

A common type of illegal arrangement is compensation based on volume of patient referrals generated or based on the amount of product — controlled substances or durable medical equipment — provided.

Health care providers who own or manage their business should carefully review profit-sharing plans. Health care providers who act as employees should be weary of mandatory upcoding, where corporate policy requires providers to inflate the time spent rendering telehealth services or requires specific bundles of treatment options. Everyone should take care to properly represent the scope of virtual services provided, as this is another common reason for criminal indictments.


Importantly, the Anti-Kickback Statute imposes criminal liability on both sides of the transaction: the person/entity paying, and the person/entity receiving.

This means that health care providers should generally avoid taking rewards, bonuses and other incentives from their business partners. Health care providers can, and should, ask questions about any arrangements to provide care or services. Health care providers should ensure that arrangements are reduced to writing and reviewed by their own counsel. Even health care providers who are not directly responsible for business operations must do their due diligence to ascertain they themselves do not violate state or federal law. Criminal convictions and/or criminal activity is often an underlying cause of discipline for regulatory boards that govern professional licensure.


Always remember that licensure is an individual privilege, and while it may be tempting to rely on the assurances of others, ultimately it is an individual obligation.

Health care providers have an affirmative obligation to affirm that they are not personally involved in fraudulent or abusive behaviors. They can do this by steering clear of reward and rebate programs. Also, health care providers should have at least a rudimentary understanding of the applicable state law. They should understand that any employer asking them to provide care for nationwide telehealth patients without a thorough review of state licensing laws is potentially putting their license at risk.

Ultimately, they should understand the old adage "ignorance of the law does not excuse violation of the law."

Read the full article here