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DME Fraud Defense Lawyers

The 5 Pitfalls of DME – Durable Medical Equipment

Lynette Byrd
Attorney Lynette Byrd
Healthcare Fraud Team Lead
Former Federal Prosecutor
Nick Oberheiden
Attorney Nick Oberheiden
Healthcare Fraud Team
Kevin M. Sheridan
Kevin M. Sheridan
Healthcare Fraud Team
Former FBI Special Agent
Wade McFaul
Wade McFaul
Healthcare Fraud Team
Former HHS-OIG Assistant Special Agent-in-Charge

A Real-Life Example of a DME Fraud Investigation

It is Thursday morning at 8:00am. A DME company owner (“John”) arrives at his office to find approximately 20 police cars in the parking lot. Special agents from the Federal Bureau of Investigation (FBI), the Office of Inspector General (OIG), and the Department of Justice (DOJ) approach John to inform him that they have a federal search and seizure warrant to raid his office and his house, and that they have probable cause to believe that John’s DME business is engaged in healthcare fraud, Medicare fraud, mail fraud, wire fraud, and the receipt of illegal kickbacks. John is in shock. How could this happen? What in the world did he do wrong? He is a good man. He has never been accused of anything illegal—he has never even received a traffic ticket. He would never risk his freedom by doing something illegal, no matter how lucrative it may be.

About Federal Lawyer Dr. Nick Oberheiden

Attorney Dr. Nick Oberheiden is intimately familiar with scenarios just described. He has represented hundreds of medical providers and healthcare business owners (including DME business owners) in high-stake civil and criminal fraud investigations. His experience includes representing clients in matters involving the FBI, OIG, DOJ, Centers of Medicaid and Medicare (CMS), and local U.S. Attorney’s Offices. In addition to his experience as a DME fraud defense lawyer, Nick also has extensive experience counseling clients on matters pertaining t DME compliance.

It is this frontline experience that allows Nick to effectively advise and counsel his corporate healthcare clients so that they can avoid the mistakes made by others. This experience is unique. Rather than learning about healthcare rules from books and seminars, Nick is a hands-on federal defense attorney who is called to rescue doctors, entrepreneurs, Medicare providers, and increasingly DME companies that are facing federal search warrants, raids, arrests, audits, and investigations.

As a result of his experience, Nick has seen first-hand how “minor” mistakes, ignorance of federal program billing rules, and lack of an effective compliance programs can lead to invasive federal fraud investigations. This front-line experience, combined with experience of the firm’s lawyers who previously served with the DOJ leading healthcare fraud prosecutions, is what makes Oberheiden, P.C. the go-to choice for DME company owners and executives in need of comprehensive and trustworthy legal representation.

Put our highly experienced team on your side

Dr. Nick Oberheiden
Dr. Nick Oberheiden



Lynette S. Byrd
Lynette S. Byrd

Former Assistant U.S. Attorney


Ellen Comley
Ellen Comley

Senior Counsel


Roger Bach
Roger Bach

Former Special Agent (OIG)

Steven Taylor
Steven Taylor

Healthcare Compliance Consultant

Susan Sage
Susan Sage

Healthcare Auditor

Why are DME Companies Being Targeted So Aggressively by the DOJ, FBI, and OIG?

DME companies are currently being heavily targeted by the DOJ, FBI, OIG and other federal authorities. The reason for this is that DME companies fall at the intersection of many of the enforcement issues that are currently top federal law enforcement priorities. From medical marketing to telemedicine practice, DME companies can face prosecution from many different angles, and company owners who fail to effectively defend themselves can face substantial monetary penalties and years behind bars.

DME Defense Attorney: What to Do

The key legal issues facing DME companies include:

1. Medical Marketing

Many DME companies utilize marketing arrangements that violate federal law. Everyone understands that business development is an integral part of any company’s ability to survive. However, unlike the rules that apply to most other industries, the restrictions governing the healthcare industry are complex and unforgiving. For example, simply choosing whether to designate a marketer as a W2 employee or a 1099 contractor can determine whether a DME company is in violation of the federal Anti-Kickback Statute. The Anti-Kickback Statute prohibits certain compensation structures for referring or directing federally-funded patients. Commissions, percentage-based compensation, and individual rewards are generally prohibited.

Another common issue is that many DME companies do not have written contracts with their marketers – a practice which federal authorities consider to be non-transparent. To avoid scrutiny in this area, structuring Medicare-compliant marketing compensation arrangements should be a centerpiece of compliance.

2. Buying Medicare Leads

In addition to their traditional marketing efforts, some DME businesses have turned to buying leads from online companies. These lead-generation businesses have built large databases of patients that may qualify for DME based on records showing past surgeries, pain management visits, and other indications. Buyers typically receive a patient’s name, phone number, and other information to contact the patient and verify the lead. As the DME market is skyrocketing, a single DME lead can cost up to $500 in some areas.

Buying leads is dangerous business. The DOJ has an extensive track record when it comes to criminally prosecuting lead agencies, DME companies, and others for making available and using the personal information of individuals in need of medical services. These prosecutions typically focus on two main issues:

  • HIPAA Violations – The first (and smaller) issue is HIPAA. HIPAA protects sensitive patient information from unwanted disclosure. “Trading” such information would require, at an absolute minimum, the patient’s informed consent and a written agreement, and online lead companies almost never have this documentation.
  • Anti-Kickback Statute Violations – The bigger issue with buying or selling leads is that the CMS and the DOJ consider these transactions to constitute violations of the federal Anti-Kickback Statute. If your DME business is purchasing Medicare leads, or if you are considering doing so, you should contact Nick us to make sure that your arrangement does not violate the Anti-Kickback Statute and is appropriately documented in a legally-compliant contract.

3. Medical Necessity

Success in healthcare starts and ends with improving the patient’s condition. Marketing may be an important element of running a DME business, but at what point does marketing cross the line to patient brokering, patient solicitation, or talking a patient into buying a device he or she does not need? Does the patient really need the wheelchair? What should the patient do if he or she already has a back brace?

Almost all DME businesses focus too little on the most important aspect of operating in the healthcare industry: medical necessity. Typically, DME company owners will say that they leave the medical necessity decision to a doctor. Their company just ships the order. This view, in our opinion, is too short-sighted.

The DOJ looks at the entire process of delivering a medical device to a patient, not just the doctor’s treatment recommendation. In this regard, the DOJ’s current focus on DME is similar to its recent targeting of compound pharmacies: While compound pharmacy owners took the position that they just filled doctors’ prescriptions, the DOJ repeatedly charged the doctor, the pharmacy owner, and the pharmacist. Why? Because the DOJ viewed the entire process of delivering medically-unnecessary prescriptions to patients as a healthcare fraud conspiracy. Under federal conspiracy laws, all parties participating in a “scheme” to defraud the government (i.e. by billing for medically-unnecessary prescriptions or DME) can be held criminally liable.

Dr. Nick Oberheiden has developed effective defense strategies for protecting DME companies from these types of allegations. Federal healthcare fraud investigations are very different from other types of legal matters. Hiring experienced legal counsel counts. If you do not want a doctor’s mistake to cost you your business, your reputation, and your freedom, call Nick to make sure you are not at risk for federal prosecution.

4. Telemedicine

Telemedicine presents unique compliance challenges for DME businesses as well. While, in principle, few would deny the benefits of telemedicine in 21st century medical practice, the law has not fully caught up to the omnipresence of telemedicine, particularly in the context of consultations for Medicare patients. Under current law, telemedicine consultations are compared to traditional doctor-patient office visits: the patient walks in, signs forms, sees medical staff, and eventually meets with a physician. However, almost by definition, unlike a patient seeing a primary care doctor regularly, telemedicine is a sporadic business where the patient typically has a one-time interaction with the physician, the physician does not touch or examine the patient, and the physician can only offer limited face-to-face time.

Recent DOJ press releases have publicized dozens of cases in which physicians, marketing companies, and DME business owners have been indicted for their roles in alleged telemedicine fraud schemes. In today’s world, telemedicine is a legal minefield. From triage to consultation, and from physician compensation structures to establishing an appropriate doctor-patient relationship, there are numerous issues that can present liability risks for DME companies that supply products based on physicians’ treatment recommendations during telemedicine consultations. If telemedicine is an integral part of your DME business, be aware, it can be done, but it should be done with caution and based upon sound legal advice. Call Nick today and find out what traps to avoid in telemedicine arrangements, how to ensure the establishment of a real doctor-patient relationship, and how to protect your DME business against being investigated for the mistakes of telemedicine operators.

5. No Compliance Program

Given that compliance mistakes in running a DME business are not just possible but very likely and very common, each business owner must make a fundamental decision: Do I risk being caught with errors? Or, do I get good sleep at night knowing that I have the documentation and agreements in place that will shield me from criminal allegations in the event of a federal investigation?

What does not help is simply assuming that, if your DME business is targeted in a federal investigation, the government will believe that you had good intent and did not knowingly overbill Medicare. No one will take an x-ray of your brain to determine if you are a good person. In fact, in healthcare, the second most regulated industry in the United States, the burden of proof is on you. While it is true that the government has the burden of proof in court, this step only comes after you have been arrested and indicted.

In order to avoid these risks, your best bet is prevention. Have the federal healthcare lawyers and DME consultants at Oberheiden, P.C. establish structures, procedures, policies, protocols, and guidelines for your business. Prepare the right contracts and documentation so that you don’t need to wonder anymore whether the contract you just signed can get you into trouble. Make sure your staff is trained and your marketers are educated. Make sure you cover all of your exposure areas, and remember: You may have good intent, but what matters is your ability to affirmatively demonstrate that you have taken appropriate steps to comply with the law. Think of John in the example above: It wasn’t him, it was someone working for him that got him in the middle of a life-changing federal criminal investigation.

How To Select a DME Defense Attorney

Contact a Federal DME Fraud Defense Lawyer Dr. Nick Oberheiden Today

The trusted DME fraud defense lawyers and former federal prosecutors at Oberheiden, P.C. can help you and your company avoid federal prosecution. To build your business safely and with confidence, call 888-680-1745 or contact us online to schedule a free initial consultation with Dr. Nick Oberheiden today.

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