A $1 billion Medicare fraud scheme tied to mandated healthcare coverage under Obamacare has led to the conviction of Arizona CEO Gary Cox, exposing the dark side of America’s healthcare system.
Barack Obama’s namesake achievement in office was the so-called Affordable Care Act – aka Obamacare.
Many Americans suspected where it would lead.
But former President Barack Obama will be furious when he learns of this conviction related to his scheme on all of America
Arizona CEO orchestrated massive Medicare fraud operation
Healthcare fraud has reached epidemic proportions in America.
One CEO thought he could outsmart the system and get away with it.
But Gary Cox got caught red-handed after this $1 billion scheme finally came crashing down.
$1 billion scheme finally came crashing down
Gary Cox believed he had discovered the perfect way to bilk American taxpayers out of their hard-earned money.
The 79-year-old CEO from Maricopa County, Arizona ran a company called Power Mobility Doctor Rx, LLC (DMERx) that looked legitimate on the surface.
But underneath the corporate veneer, Cox was operating one of the most brazen healthcare fraud schemes in recent history.
A federal jury convicted Cox of running a platform that generated fake doctors’ orders to defraud Medicare and other federal health programs of more than $1 billion.
Cox and his criminal associates went after hundreds of thousands of Medicare beneficiaries using misleading mail campaigns, TV ads, and calls from overseas call centers.
The scammers tricked unsuspecting seniors into handing over their personal details and agreeing to receive unnecessary medical braces, pain relief creams, and other items they never actually needed.
DMERx served as an internet-based platform that generated fraudulent doctors’ orders for these worthless medical supplies.
Cox built connections between pharmacies, medical equipment suppliers, and marketers with corrupt telemedicine companies that took illegal payments and bribes for signed doctors’ orders.
The whole operation was designed to steal money from Medicare while putting vulnerable seniors at risk.
Fake doctors’ orders fooled Medicare for years
The fraudulent system Cox created was as cynical as it was profitable.
The so-called doctors’ orders generated by DMERx falsely claimed that legitimate physicians had examined and treated Medicare beneficiaries.
In reality, the telemedicine companies paid doctors to sign orders without any regard for medical necessity.
Some doctors signed orders based only on brief telephone calls with patients, while others signed them without any interaction with the beneficiary whatsoever.
The medical equipment suppliers and pharmacies that paid illegal kickbacks for these bogus orders then billed Medicare and other insurers for more than $1 billion in fraudulent claims.
Medicare and private insurers paid out more than $360 million based on these fake claims before federal investigators caught on to the scheme.
Cox and his accomplices tried to hide their crimes using fake contracts and scrubbing what one conspirator called "dangerous words" from medical orders that might alert Medicare auditors to the scam.
But their elaborate deception couldn’t fool federal investigators forever.
Justice Department sends clear message about healthcare fraud
The conviction represents a major victory for federal prosecutors who have been cracking down on healthcare fraud schemes targeting vulnerable Americans.
"The defendant orchestrated a scheme to defraud government health care benefit programs on a massive scale, creating fraudulent doctors’ orders used to bill insurers over $1 billion," said Matthew R. Galeotti, Head of the Justice Department’s Criminal Division.
Galeotti noted that Americans are "all too familiar with junk mail and spam calls that target seniors to steal their personal information and promote waste, fraud, and abuse in our economy."
The Justice Department’s Criminal Division promised to "continue to aggressively prosecute health care fraud schemes to hold criminals accountable, protect the vulnerable, and recover financial losses."
Federal investigators from multiple agencies worked together to bring down Cox’s operation.
HHS-OIG, FBI, VA-OIG, and DCIS investigated the case.
Cox faces decades behind bars
The federal jury convicted Cox on multiple serious charges that could land him in prison for the rest of his life.
Cox was found guilty of conspiracy to commit health care fraud and wire fraud, three counts of health care fraud, conspiracy to pay and receive health care kickbacks, and conspiracy to defraud the United States.
He faces a maximum penalty of 20 years in prison for the conspiracy to commit health care fraud and wire fraud conviction alone.
Each health care fraud conviction carries a potential 10-year sentence, while the kickback and fraud conspiracies each carry five-year maximum sentences.
A federal judge will determine Cox’s final sentence after considering federal sentencing guidelines and other factors.
The case sends a powerful message that healthcare fraud will not be tolerated, especially schemes that target vulnerable seniors and steal from taxpayer-funded programs like Medicare.
"The defendant deliberately exploited the federal health care system by prioritizing personal enrichment over the medical needs of vulnerable patients," stated Deputy Inspector General for Investigations Christian J. Schrank of the Department of Health and Human Services Office of Inspector General.
A key component of Barrack Obama’s signature legislative achievement Obamacare was expanding Medicaid to allow states to expand Medicaid eligibility to cover adults under 65 with incomes up to 138% of the federal poverty level (FPL).
To date, 41 states (including DC) have adopted the Medicaid expansion.
Meanwhile voters in 10 states – Florida, Georgia, Kansas, Mississippi, South Carolina, Wisconsin, Wyoming – have thus prevented politicians from inflicting it on their states.
Similar to the provisions under Medicare rules that likely encouraged Cox’s scheme, the Affordable Care Act (ACA) also mandated so-called Essential Health Benefits (EHBs) that most health plans must cover, including Rehabilitative and Habilitative Services and Devices – a category covering services and devices, such as prosthetics and durable medical equipment (DME), supposed to help patients improve or maintain skills for daily functioning.
However as the DMERx case shows, mandated coverage of anything tends to encourage fraud.
