A federal jury in Florida convicted Gary Cox, 79, the CEO of Power Mobility Doctor Rx, LLC (DMERx), on Friday for his role in a massive scheme that defrauded Medicare and other federal healthcare programs of over $1 billion. The verdict marks a significant victory for law enforcement agencies dedicated to combating healthcare fraud.
According to evidence presented during the trial, Cox, a resident of Maricopa County, Arizona, orchestrated an elaborate operation targeting hundreds of thousands of Medicare beneficiaries. The scheme involved misleading mailers, television advertisements, and calls from offshore call centers to entice individuals to provide their personal information in exchange for medically unnecessary orthotic braces, pain creams, and other items.
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Cox and his co-conspirators owned and operated DMERx, an internet-based platform crucial to the fraudulent enterprise. This platform generated false and fraudulent doctors’ orders for the unsolicited medical items.
Cox acted as a central connector, linking pharmacies, durable medical equipment (DME) suppliers, and marketers with telemedicine companies. These telemedicine companies, in turn, accepted illegal kickbacks and bribes for signed doctors’ orders transmitted via the DMERx platform. Cox and his associates profited by coordinating these illicit transactions and funneling the completed, fraudulent orders to the DME suppliers, pharmacies, and telemarketers who paid for them.
The doctors’ orders generated by DMERx falsely claimed that a physician had examined and treated the Medicare beneficiaries. In reality, the purported telemedicine companies paid doctors to sign these orders without any regard for medical necessity, often based on only a brief phone call with the beneficiary, or in some cases, no interaction at all.
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The DME suppliers and pharmacies that participated in this kickback scheme proceeded to bill Medicare and other insurers more than $1 billion based on these fraudulent claims. Medicare and the insurers ultimately paid out over $360 million.
To conceal their illicit activities, Cox and his co-conspirators employed sham contracts and deliberately removed what one co-conspirator termed “dangerous words” from doctors’ orders, fearing such language might trigger Medicare audits of the scheme’s DME suppliers.
U.S. Attorney Hayden P. O’Byrne for the Southern District of Florida emphasized the broad impact of such crimes: “Medicare fraud undermines the integrity of our nation’s most critical healthcare programs… Fraud of this kind wastes taxpayer dollars and increases the cost of healthcare for all Americans.”
Matthew R. Galeotti, Head of the Justice Department’s Criminal Division, highlighted the scale of the deception: “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.” He reiterated the Criminal Division’s commitment to prosecuting healthcare fraud, protecting vulnerable populations, and recovering financial losses.
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Special Agent in Charge David Spilker of the Department of Veterans Affairs Office of Inspector General’s Southeast Field Office condemned the targeting of veterans, stating, “Fraud schemes perpetrated against veterans are abhorrent and will be thoroughly investigated.”
Cox was convicted 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 and make false statements in connection with health care matters.
He now faces a maximum penalty of 20 years in prison for the conspiracy to commit health care fraud and wire fraud conviction, 10 years for each healthcare fraud conviction, five years for the conspiracy to pay and receive healthcare kickbacks conviction, and five years for the conspiracy to defraud the United States and make false statements in connection with health care matters conviction.
A sentencing hearing will be scheduled at a later date, where a federal district court judge will determine the final sentence based on U.S. Sentencing Guidelines and other statutory factors.
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