CEO of Health Care Software Company Convicted of $1B Fraud Conspiracy

WASHINGTON—A federal jury convicted the CEO of Power Mobility Doctor Rx, LLC (DMERx) for his role in operating a platform that generated false doctors’ orders to defraud Medicare and other federal health care benefit programs of more than $1 billion.

According to court documents and evidence presented at trial, Gary Cox, 79, of Maricopa County, Arizona, and his co-conspirators targeted hundreds of thousands of Medicare beneficiaries who provided their personally identifiable information and agreed to accept medically unnecessary orthotic braces, pain creams and other items through misleading mailers, television advertisements and calls from offshore call centers. Cox and his co-conspirators owned, controlled and operated DMERx, an internet-based platform that generated false and fraudulent doctors’ orders for these items. 

As part of the scheme, Cox connected pharmacies, durable medical equipment (DME) suppliers and marketers with telemedicine companies that would accept illegal kickbacks and bribes in exchange for signed doctors’ orders transmitted using the DMERx platform. Cox and his co-conspirators received payments for coordinating these illegal kickback transactions and referring the completed doctors’ orders to the DME suppliers, pharmacies and telemarketers that paid kickbacks and bribes for the orders.

The fraudulent doctors’ orders generated by DMERx falsely represented that a doctor had examined and treated the Medicare beneficiaries when in fact purported telemedicine companies paid doctors to sign the orders without regard to medical necessity, based only on a brief telephone call with the beneficiary or no interaction with the beneficiary at all. The DME suppliers and pharmacies that paid illegal kickbacks in exchange for these doctors’ orders billed Medicare and other insurers more than $1 billion. Medicare and the insurers paid more than $360 million based on these claims. According to evidence presented at trial, Cox and his co-conspirators concealed the scheme through sham contracts and by eliminating from doctors’ orders what one co-conspirator described as “dangerous words” that might cause Medicare to audit the scheme’s DME suppliers.

“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,” said Matthew R. Galeotti, head of the Justice Department’s criminal division. “Americans are all too familiar with junk mail and spam calls that target seniors to steal their personal information and promote waste, fraud, and abuse in our economy. The criminal division will continue to aggressively prosecute health care fraud schemes to hold criminals accountable, protect the vulnerable and recover financial losses.”

“Medicare fraud undermines the integrity of our nation’s most critical healthcare programs, which are relied upon by millions of patients, doctors and honest healthcare professionals,” said U.S. Attorney Hayden P. O’Byrne for the Southern District of Florida. “Fraud of this kind wastes taxpayer dollars and increases the cost of healthcare for all Americans. Together with our law enforcement partners, we will relentlessly pursue those who steal from taxpayers and exploit our healthcare system for their own personal gain”

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. Cox 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 health care fraud conviction, five years for the conspiracy to pay and receive health care 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. A federal district court judge will determine any sentence after considering the U.S. sentencing guidelines and other statutory factors.