Florida woman to pay $20.3M after using telemedicine to shield alleged fraud

The U.S. Department of Justice announced earlier this month that an Indian Rocks Beach, Florida-based woman has pleaded guilty to conspiracy to commit healthcare fraud and filing a false tax return. 

Kelly Wolfe and her company, Regency, Inc., have also agreed to pay up to $20.3 million to resolve allegations that they violated the False Claims Act.  

Among the allegations are that Wolfe and her conspirators submitted well over $400 million in illegal durable medical equipment claims to Medicare and the Civilian Health and Medical Program of the Department of Veterans, relying on the guise of “telemedicine” to explain the unusually high volume of claims.  

In reality, the DOJ alleges, the conspirators had bribed doctors to approve the claims.  

“This pernicious telefraud scheme’s ambitions were cut short by the exceptional partnership of our law enforcement partners,” said Special Agent in Charge Omar Pérez Aybar of the U.S. Department of Health and Human Services Office of Inspector General in a statement.   


The DOJ describes the case as involving one of the largest healthcare fraud schemes in U.S. history.   

It arose after a former Regency employee filed a whistleblower lawsuit in March 2019 alleging that the defendants had defrauded Medicare by setting up sham storefronts to sell back and knee braces to senior citizens.  

The subsequent nationwide raid, orchestrated by the DOJ, the Federal Bureau of Investigation and other federal agencies, was dubbed “Operation Brace Yourself.”  

According to court documents, Wolfe and Regency established hundreds of DME fronts, which then provided unlawful kickbacks through telemedicine companies, created fraudulent telemedicine orders for DME supplies, and then submitted claims for reimbursement.   

As outlined in a 2019 indictment, the braces were prescribed with minimal – if any – patient interaction, and companies encouraged patients to use telemedicine doctors for “maximum efficiency.”  

“Fraud and deceit in our nation’s healthcare system is not only unacceptable, it is illegal,” said U.S. Attorney Maria Chapa Lopez for the Middle District of Florida.   

“The U.S. Attorney’s Office will continue to aggressively work with our investigative partners in rooting out these illicit practices to ensure that patients receive the optimum care they deserve,” Lopez continued.  


Although the events outlined in court documents took place before the current boom in telehealth use ushered in by the COVID-19 pandemic, concerns about fraud have shadowed conversations about the future of virtual care.  

At a meeting of MedPAC, which advises Congress on issues affecting Medicare, UnityPoint CEO Sue Thompson pointed to large-scale fraud as one of the “three core risks in the chapter around telehealth.”  

The DOJ is bringing the hammer down, however, in existing telehealth fraud claims. This past month, the agency announced that a Tampa pharmacy owner faces 10 years in prison for a $931 million telemedicine pharmacy healthcare-fraud conspiracy.  

“Telemarketing fraud is a major threat to the integrity of government and commercial insurance programs,” said Derrick L. Jackson, special agent in charge at the U.S. Department of Health and Human Services’ Office of Inspector General in Atlanta.


“Honest and law-abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets,” said Special Agent in Charge Brian Payne of IRS Criminal Investigation.   

“Fleecing the healthcare industry effectively robs us all, and tax fraud undermines the integrity of our nation’s tax system. Those who engage in these swindles should know they will not go undetected and will be held accountable,” Payne added.


Kat Jercich is senior editor of Healthcare IT News.
Twitter: @kjercich
Email: [email protected]
Healthcare IT News is a HIMSS Media publication.

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