A Kansas man has admitted running an online platform that facilitated a $1 billion fraud scheme targeting Medicare and other federal health care programs.
Key Details
- Gregory Schreck, 50, of Johnson County, pleaded guilty to conspiracy to commit health care fraud.
- He and his co-conspirators used misleading ads and calls to obtain personal information from Medicare beneficiaries.
- The fraud involved medically unnecessary orthotic braces, pain creams, and other medical supplies.
- Schreck helped operate DMERx, a platform that generated fake doctors’ orders.
How the Scheme Worked
Schreck and his associates controlled DMERx, an internet-based system that created fraudulent medical orders. The scheme functioned through illegal kickbacks and bribes:
- Marketers and suppliers paid telemedicine companies to provide fraudulent doctors’ orders.
- These companies falsely claimed doctors had examined and treated Medicare beneficiaries.
- In reality, doctors signed off on these prescriptions based on brief phone calls or no interaction at all.
- The fraudulent orders were then sent to durable medical equipment (DME) suppliers, pharmacies, and telemarketers who paid for them.
- These entities then billed Medicare and other insurers for over $1 billion.
- More than $360 million was actually paid out by Medicare and insurance providers before the fraud was exposed.
Legal Consequences
Schreck now faces serious legal repercussions:
- He pleaded guilty to conspiracy to commit health care fraud.
- He could face up to 10 years in prison.
- A sentencing hearing will be scheduled later, where a judge will determine his final penalty based on US Sentencing Guidelines.
Law Enforcement Response
Several federal agencies worked together to uncover and prosecute the case:
- Department of Health and Human Services Office of Inspector General (HHS-OIG)
- Federal Bureau of Investigation (FBI)
- Department of Veterans Affairs Office of Inspector General (VA-OIG)
- Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS)
Officials emphasized the seriousness of the crime and the ongoing efforts to combat health care fraud.
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Crackdown on Health Care Fraud
The Justice Department’s Fraud Section has been aggressively targeting health care fraud through its Health Care Fraud Strike Force Program:
- Since 2007, the program has charged over 5,800 defendants.
- These individuals collectively attempted to defraud federal health care programs and private insurers of more than $30 billion.
- The Centers for Medicare & Medicaid Services (CMS) is working with HHS-OIG to hold fraudulent providers accountable.
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What Happens Next?
With Schreck’s guilty plea, authorities are expected to continue investigating others involved in the scheme.
Additional charges and penalties may follow for co-conspirators who played a role in defrauding Medicare and federal health care programs.
