Telemedicine Company Owner Pleads Guilty to $424M Medicare Fraud Scheme

The owner of Video Doctor USA admitted that he took kickbacks and paid bribes for inducing healthcare providers to bill Medicare for unneeded orthopedic braces.  

The owner/operator of several telemedicine companies in the United States has pleaded guilty to accepting kickbacks in exchange for billing $424 million to Medicare for medically unnecessary orthopedic braces, the Department of Justice said.

Federal prosecutors described the scheme led by Lester Stockett, 52, of Medellin, Colombia, and 24 coconspirators as one of the largest healthcare frauds ever investigated.

Stockett was the owner of Video Doctor USA and Telemed Health Group LLC, and was the CEO of AffordADoc. On Friday, he pleaded guilty to two related counts of accepting kickbacks and money laundering. Sentencing has been scheduled for Dec. 16 in a federal district court in New Jersey, DOJ said.

As part of the plea agreement, Stockett will pay $200 million in restitution and forfeit assets and property traceable to ill-gained proceeds.  Stockett's sentencing is set for Dec. 16 before U.S. District Judge Madeline Cox Arleo of the District of New Jersey, who accepted his plea today.

"The extent of Mr. Stockett's fraud and money laundering, literally, knew no bounds," Special Agent in Charge Gregory W. Ehrie of the FBI's Newark Field Office, said in a media release.

"From the U.S. to Latin America, the Philippines, and the Dominican Republic, the FBI followed the trail of ill-gotten gains back to Stockett and his conspirators. They stole precious federal funds earmarked to assist the elderly," he said.  

Under the plea deal, Stockett admitted that he and his codefendants solicited and received kickbacks and bribes from patient recruiters, pharmacies, brace suppliers and others in exchange for arranging for doctors to order medically unnecessary orthotic braces.

The Medicare 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, DOJ said.

Stockett admitted that he and his codefendants at Video Doctor Network paid kickbacks and bribes to providers to order medically unnecessary braces for Medicare beneficiaries. Many of these orders were written after a short telephone call. 

The scheme billed Medicare for more than $424 million in false claims, and Medicare paid these brace suppliers in excess of $200 million.  

The schemers hid the kickbacks and bribes from federal auditors using nominee companies and bank accounts in the United States and the Dominican Republic, DOJ said.

In addition, Stockett admitted that he and other owners and executives of the Video Doctor Network schemed to defraud investors and others by making false and fraudulent representations that the Video Doctor Network was a legitimate telemedicine enterprise that made revenue of "$10 million per year" and "20% profit" from payments by beneficiaries who enrolled in a membership program and paid for the telemedicine consultations.

On the money laundering charge, Stockett admitted that from 2016 through 2019, he and his codefendants transferred about $10 million in kickbacks from a bank in the U.S. to the account of Droneza Consulting, a corporation in the Dominican Republic.

To hid the kickbacks, Stockett admitted that the schemers then then transferred more than $9.8 million from a Droneza Consulting account back to bank accounts of AffordADoc in the United States, DOJ said.  

Creaghan Harry, 51, of Highland Beach, Florida, and Elliot Loewenstern, 56, of Boca Raton, Florida, were also indictment in the scheme. They await trial.