Feds bust $1.2 billion Medicare scam; doctors and medical executives among those charged

The Department of Justice on Tuesday announced federal charges against 24 defendants — including physicians and medical company executives — allegedly involved in a fraud scheme that bilked Medicare out of more than $1.2 billion.

What are the details?

During the investigation — called Operation Brace Yourself — authorities discovered a widespread phone scam that involved luring elderly and disabled patients into getting medically unnecessary back, shoulder, wrist, and knee braces. Doctors, medical equipment firms, and telecommunication executives are accused of lining their pockets at the expense of taxpayers by orchestrating hundreds of thousands of fraudulent claims to Medicare.

CBS News reported the scam involved telemarketers in call centers based in the Philippines and throughout Latin America, who would reach out to Medicare patients offering "free" orthopedic braces. Interested parties were put in touch with physicians who were paid to write prescriptions (sight unseen) for the unneeded devices, which medical equipment firms billed to Medicare. As many as 130 companies were involved.

Officials caught on when complaints began rolling in from concerned patients and their loved ones. All told, $1.7 billion worth of claims were made under the scam, more than $900 million was paid out, and the loss to Medicare was calculated to be more than $1.2 billion.

"The defendants took advantage of unwitting patients who were simply trying to get relief from their health concerns," U.S. Attorney Craig Carpenito said in a statement.

"Instead, the defendants preyed upon their weakened state and pushed millions of dollars' worth of unnecessary medical devices, which Medicare paid for, and then set up an elaborate system for laundering their ill-gotten proceeds."

Prosecutors say the funds were funneled through international shell companies and used to purchase yachts, luxury cars and real estate.

Gary Cantrell, who oversees fraud investigations for the Health and Human Services inspector general's office, told NBC News, "The taxpayers should be outraged by this. These are losses to the Medicare program that we all, as taxpayers, fund."

Anything else?

The investigation was conducted by the FBI in conjunction with the Department of Health and Human Services, and involved the IRS and 17 U.S. attorney's offices. Defendants in several states have been arrested, including New Jersey, Florida, Texas and California.