Federal agents serve a search warrant at Certified Medical Supply Inc., 603 E. Eighth St., in Port Angeles on Tuesday morning. (Jesse Major/Peninsula Daily News)

Federal agents serve a search warrant at Certified Medical Supply Inc., 603 E. Eighth St., in Port Angeles on Tuesday morning. (Jesse Major/Peninsula Daily News)

Federal agents serve search warrants in Port Angeles in nationwide case

Department of Justice: Action part of ‘one of the largest health care fraud schemes investigated’

PORT ANGELES — Federal agents served search warrants at two durable medical equipment supply companies in Port Angeles on Tuesday morning in connection with what the Department of Justice is calling “one of the largest health care fraud schemes investigated” in the nation.

Federal authorities said the $1.2 billion scam involved foreign call centers and doctors who prescribed unnecessary orthopedic braces to hundreds of thousands of elderly or disabled people across the country, defrauding Medicare of hundreds of millions of dollars.

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

No one in Port Angeles has been charged.

Agents from the FBI, the U.S. Department of Health & Human Services Office of the Inspector General and Department of Veterans Affairs Office of Inspector General who were serving warrants at Canoga Medical Supply, 310 E. Eighth St., and Certified Medical Supply Inc., 603 E. Eighth St., would not comment.

The state Department of Revenue lists Matthew Gibbs as the owner of Canoga Medical Supply. Gibbs and Shane Eli Yamamoto are listed as owners of Certified Medical Supply Inc.

Canoga Medical Supply was incorporated in California while Certified Medical Supply was incorporated in Nevada. A Nevada phone number listed for Gibbs was “not in service” Tuesday.

Both Gibbs and Yamamoto have addresses in the greater Victoria area, according to the Nevada Secretary of State’s Office.

The Port Angeles Police Department provided security at Canoga Medical Supply while agents served a warrant. Agents at Certified Medical Supply were seen going through boxes of paper records and photographing evidence.

Emily Langlie, spokesperson for the Department of Justice in Seattle, said that she does not expect any charges or arrests resulting from the Port Angeles search warrants “at this point.”

The case has resulted in charges against 24 defendants, including the CEOs, COOs and others associated with five telemedicine companies, the owners of more than a dozen durable medical equipment companies and three licensed medical professionals for their alleged participation in health care fraud schemes involving more than $1.2 billion in loss, as well as the execution of more than 80 search warrants in 17 federal districts, according to a Department of Justice press release.

Those charges are being prosecuted in the District of New Jersey, the Middle District of Florida, the Northern District of Texas, the Western District of Texas, the Eastern District of Pennsylvania and the Central District of California.

On Tuesday the Center for Medicare Services, Center for Program Integrity took “adverse administrative action” against 130 durable medical equipment companies that had submitted more than $1.7 billion in claims and were paid more than $900 million.

The Department of Justice said that in addition to the Medicare Fraud Strike Force prosecutions, related search warrants were served in New Jersey, South Carolina, California, Nebraska, Florida, Missouri and at the two locations in Port Angeles.

The Department of Justice alleges a scheme involving illegal kickbacks and bribes by the durable medical equipment companies in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for back, shoulder, wrist and knee braces that are medically unnecessary.

Medical equipment companies would get $500 to $900 per brace from Medicare and would pay kickbacks of nearly $300 per brace.

The Department of Justice said some of the defendants controlled an international telemarketing network that lured hundreds of thousands of elderly and/or disabled patients into a criminal scheme that crossed borders, involving call centers in the Philippines and throughout Latin America.

The defendants paid doctors to prescribe braces either without any patient interaction or with only a brief telephonic conversation with patients they had never met or seen, according to the Department of Justice.

The scam was detected last summer, officials said. Complaints from beneficiaries were pouring in to the Medicare fraud hotline, and some consumer news organizations warned seniors. As the investigation progressed, Cantrell said, federal agents gained cooperation from people familiar with the various schemes.

The proceeds were laundered through international shell corporations and used to purchase exotic cars, yachts and luxury real estate in the United States and abroad, according to the Department of Justice.

“These defendants — who range from corporate executives to medical professionals — allegedly participated in an expansive and sophisticated fraud to exploit telemedicine technology meant for patients otherwise unable to access health care,” said Assistant Attorney General Brian Benczkowski. “This Department of Justice will not tolerate medical professionals and executives who look to line their pockets by cheating our health care programs.”

Any doctors or medical professionals who have been involved with alleged fraudulent telemedicine and DME marketing schemes — including Video Doctor USA, AffordADoc, Web Doctors Plus, Integrated Support Plus and First Care MD — should call to report this conduct to the FBI hotline at 1-800-CALL-FBI (225-5324).

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Reporter Jesse Major can be reached at 360-452-2345, ext. 56250, or at [email protected].

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