DME (Durable Medical Equipment) Fraud Defense

You own or run a durable medical equipment company, you marketed for one, or you signed brace orders as a doctor, and now the government is treating that business as a fraud scheme. DME fraud has been one of the Department of Justice's top healthcare fraud enforcement priorities for years, and the schemes it charges, back braces, knee braces, and other orthotics billed to Medicare, have produced some of the largest takedowns in the country. If agents have contacted you, or you received a subpoena, a payment suspension, or a target letter, you are already in the middle of an investigation.

This page lays out how DME cases are built and where they are attacked. It is written for the owner, the marketer, or the physician who is worried about what comes next.

Why DME became a federal target

The equipment is usually real and often cheap. The fraud theory is about the billing and the referrals. In the schemes prosecutors charge, a telemarketing operation or lead generator contacts Medicare beneficiaries and pitches braces at little or no cost. A telemedicine doctor who never meaningfully evaluates the patient signs the order. A DME supplier bills Medicare hundreds of dollars per brace. Money moves between the supplier, the marketers, and sometimes the ordering doctors. The government treats the doctor's signature and the brief phone consult as a cover for a billing operation driven by kickbacks.

Everyone in that chain has been charged: supplier owners, call center operators, marketing company principals, and the physicians who signed.

How DME investigations start

Like most healthcare cases, these begin with billing data, not a whistleblower. Medicare contractors and analytics flag suppliers whose brace volume, or an ordering doctor's signature volume, is a statistical outlier. The government then pulls claims data, bank records, marketing contracts, and telemedicine platform records, and may impose a payment suspension that freezes your Medicare revenue before any charge is filed. HHS-OIG and the FBI run the case. By the time you hear from them, they have the paper. They want your intent.

What the government has to prove

DME schemes are charged under the health care fraud statute, 18 U.S.C. 1347, the Anti-Kickback Statute, 42 U.S.C. 1320a-7b(b), conspiracy under 18 U.S.C. 1349, and often wire fraud under 18 U.S.C. 1343 and money laundering under 18 U.S.C. 1956 and 1957. The core question is the same as in every healthcare case: did you act knowingly and willfully. A supplier who filled valid-looking orders, or a marketer who believed they were paid for lead generation and not for referrals, is not automatically a criminal. The government must prove you knew the arrangement was illegal.

What is actually at risk

Section 1347 carries up to ten years per count, and up to twenty if patient harm is alleged. Kickback counts add up to ten years each. The government pursues forfeiture and money-laundering counts to strip the proceeds, and civil liability under the False Claims Act, 31 U.S.C. 3729, with treble damages. A supplier faces revocation of its Medicare enrollment and exclusion. A physician faces licensing action and loss of the ability to bill federal programs. For most clients the business consequences arrive before the criminal case is resolved.

How DME cases are defended

Test every payment against the kickback rules. Legitimate advertising, flat-fee marketing, and bona fide employment are not kickbacks. The government's burden is to prove that a payment was for referrals of federally reimbursable business. We measure each arrangement against the Anti-Kickback Statute and its safe harbors.

Attack the signature theory. The government says the telehealth encounters were shams. Whether a physician had a legitimate basis to order a brace is a medical question, defensible patient by patient, and the existence of records, complaints of pain, and prior treatment can rebut the rubber-stamp narrative.

Contest medical necessity individually. The government proves necessity with statistics and extrapolation. We force it back to the individual claim, where independent clinical experts can defend orders the government lumped together. The same statistical shortcut drives genetic testing cases.

Pin down who billed and who profited. In many DME cases the supplier submitted the claims and kept the reimbursement. A marketer or physician who never touched a Medicare claim has a different case, and a different loss amount, than the entity that billed.

Why early action changes the outcome

DME cases are assembled over months. That means there is usually time before an indictment, and that time is where the real defense work happens. Counsel can engage the prosecutors, challenge a payment suspension, present the compliance record, and argue a client's role down or out before charges are filed. Once the grand jury returns an indictment, leverage shifts to the government. The costliest mistake in DME defense is assuming that no charge yet means no problem yet.