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Major Indictment of Telemedicine Company

The US Department of Justice (DOJ) recently filed its first criminal drug distribution prosecutions related to telemedicine prescribing through a digital health company.  The indictments accused Done Global, Inc., its founder and CEO, its clinical president, and several other persons associated with the company of participating in a scheme to distribute Adderall over the internet, conspire to commit health care fraud in connection with the submission of false and fraudulent claims for reimbursement for Adderall and other stimulants, and obstruct justice. This case is highly instructive for those seeking to structure both telemedicine arrangements and payment arrangements with healthcare providers.

Specifically, DOJ alleged that Done operated a business model wherein it charged monthly subscription fees to patients and facilitated telemedicine visits with prescribers for the treatment of ADHD, including prescribing Adderall. DOJ alleged that the business model limited the information available to prescribers, instructed Done prescribers to prescribe Adderall and other stimulants even if the patient did not qualify, mandated that initial encounters would be under 30 minutes, included an auto-refill function that allowed patients to automatically request a refill each month, did not compensate prescribers for follow-up visits or consults after the initial consults, and compensated prescribers solely based on the number of patients who received prescriptions. DOJ alleged that these practices led to false and fraudulent claims for medically unnecessary services being submitted to Medicare, Medicaid, and commercial insurers.

In addition to allegations regarding the business model, DOJ also alleged that the company had been made aware that material was posted on online social networks about how to use Done to obtain easy access to Adderall and other stimulants, but that Done allegedly sought to conceal this information and made fraudulent statements to the media regarding it. The indictments of the individual officers of the corporation are also consistent with federal law enforcement’s emphasis on holding individuals, rather than just the corporation, responsible for alleged healthcare fraud.

For anyone structuring a healthcare enterprise, or a physician contracting with such an enterprise, two of the most important issues are the compensation structure for the physician or other provider and the medical necessity of the services. Payment to a physician or other provider that is related to the volume or value of the referrals that the physician makes, the prescriptions he or she writes, or the business he or she generates may implicate numerous federal and state fraud, waste, and abuse laws. Submitting claims to Medicare, Medicaid, or commercial insurance also generally requires the entity to comply with many more requirements than an entity that is cash-pay. In regard to telemedicine, the technological modality used, site of service rules, and state licensing rules regarding the location of the patient relative to the license of the treating physician are all also important considerations.

Anyone endeavoring to set up a telemedicine business, engage in a compensation arrangement with a referring provider, or any combination thereof should be aware of the many compliance issues and risks associated with such an endeavor and carefully consider both how to structure the arrangement and whether to engage the assistance of experienced counsel.

For over 35 years, Wachler & Associates has represented healthcare providers and suppliers nationwide in a variety of health law matters, and our attorneys can assist providers and suppliers in understanding new developments in healthcare law and regulation and structuring telemedicine and provider arrangements. If you or your healthcare entity has any questions pertaining to healthcare compliance, please contact an experienced healthcare attorney at 248-544-0888 or

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