VP of DMERx Pleads Guilty to $1B Health Care Fraud Conspiracy

WASHINGTON—A Kansas man pleaded guilty to operating an internet-based 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, Gregory Schreck, 50, of Johnson County, admitted that he and his co-conspirators owned, controlled and operated DMERx, an internet-based platform that generated false and fraudulent doctors’ orders for orthotic braces, pain creams and other items. They targeted hundreds of thousands of Medicare beneficiaries to provide their personally identifiable information and agreed to accept the medically unnecessary durable medical equipment (DME) through misleading mailers, television advertisements and calls from offshore call centers. 

Schreck, who was vice president of DMERx, admitted that he offered to connect pharmacies, 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. Schreck and his co-conspirators received payments for coordinating these illegal kickback transactions. 

The fraudulent doctors’ orders generated by DMERx falsely represented that a doctor had examined and treated the Medicare beneficiaries when, in reality, purported telemedicine companies paid doctors to sign the orders without regard to medical necessity and based only on a brief telephone call with the beneficiary, or sometimes no interaction with the beneficiary at all. 

The DME suppliers and pharmacies that paid illegal kickbacks in exchange for these doctors’ orders generated through DMERx billed Medicare and other insurers more than $1 billion. Medicare and the insurers paid more than $360 million based on these false and fraudulent claims.

Schreck pleaded guilty to conspiracy to commit health care fraud and faces a maximum penalty of 10 years in prison. 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.