The Fraud Examiner

Health Care Fraud in Focus: Durable Medical Equipment

Yasmin Hoffmann, CFE
Research Project Manager, Association of Certified Fraud Examiners                                 

Durable medical equipment (DME) fraud continues to capture the spotlight as one of the leading ways that suppliers and physicians take advantage of Medicare and Medicaid programs in the U.S. DME is defined as supplies or equipment ordered by a health care provider for everyday or extended use. Examples might include wheelchairs, walkers, scooters, oxygen equipment, hospital beds, crutches, or blood-testing strips for diabetics. Some common DME fraud schemes include:

  • Billing for equipment that is not medically necessary, ineligible, or not provided
  • Paying patients and physicians to submit fraudulent claims
  • Giving kickbacks for patient referrals
  • Forging medical records or prescriptions
  • Billing for more expensive items than those shipped to the patient (known as upcoding)
  • Using stolen patient or physician identities to submit false claims
  • Knowingly providing defective equipment


Case studies

A Texas-based company, The Scooter Store, specialized in supplying power-mobility equipment and was part of a five-year federal investigation involving fraudulent government billings for medically unnecessary power wheelchairs. Doctors and former employees revealed that the company’s workers regularly harassed physicians through repeated phone calls or office drop-ins to pressure them into prescribing motorized wheelchairs for patients who did not need them. Reports estimate that between 2009 and 2012, the company defrauded Medicare for more than $100 million. The federal government fined The Scooter Store $4 million and banned the business from filing claims under government health care programs. As a result, the company filed for bankruptcy in 2013 and was forced to liquidate.

In April 2019, the FBI along with the U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) made headlines after dismantling one of the largest health care fraud schemes. Along with the U.S. Department of Justice, they were able to bring charges against 24 defendants, including telemedicine companies, DME companies and licensed medical professionals involved in what amounted to more than $1.2 billion in losses for the federal government. Among those charged or served with search-and-seizure warrants were telemedicine companies and DME suppliers across New Jersey, Florida, Texas, Pennsylvania, California and South Carolina. Most are accused of benefiting from illegal kickbacks and bribes in exchange for referring DME orders to equipment providers. Physicians are under scrutiny for writing medically unnecessary DME orders.

In one particular scheme, an international call center, located in the Philippines and throughout Latin America, would contact patients and convince these Medicare beneficiaries to accept free or low-cost back, shoulder, knee and wrist braces despite not being medically necessary. The call center would pay kickbacks to telemedicine companies to get DME orders from physicians for these patients. The telemedicine companies then paid physicians to write these orders without ever meeting the patient or merely having a brief telephone consultation. To finish, the call center sold these orders that it received from telemedicine companies to DME suppliers, who would then fraudulently bill Medicare. The elaborate fraud scheme accounted for $1 billion in losses, which were allegedly laundered through international shell companies.


DME fraud is most likely to be detected by the patient, an insurer or within a medical clinic. A recipient might notice items that were not ordered or received while reviewing their Medicare Summary Notice (MSN) or explanation of benefits (EOB) paperwork. They might also notice that they received a different quantity or type of equipment than their doctor initially prescribed. Receiving a phone call or request for Medicare information from someone other than the physician’s office is another red flag of potential DME fraud. Insurance companies are likely to detect fraud through billing procedures that DME suppliers might use to conceal their scam. These could include billing for duplicate orders, markups above state standards, higher-than-usual rental charges for equipment or submitting for DME component parts separately rather than as a complete unit. Detection within a medical clinic is possible if a doctor is careless and self-incriminates by leaving notes or reminders to distribute DME in a predetermined amount.


If fraudulent behavior is suspected, it is important to report it immediately to any of the following channels:

  • U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG)
  • Local Senior Medicare Patrol (SMP)
  • Centers for Medicare and Medicaid Services (CMS)
  • State attorneys general
  • Local law enforcement
  • State insurance department
  • State Medicaid Fraud Controls Unit (MFCU)
  • or 1-(800)-MEDICARE
  • Medicaid fraud hotline

The U.S. Department of Justice also encourages any medical professionals involved with Video Doctor USA, AffordADoc, Web Doctors Plus, Integrated Support Plus and First Care MD to report misconduct to the FBI hotline at 1-(800)-CALL-FBI. In all cases of reporting, consult with an attorney specializing in DME fraud. If reported incorrectly or without enough details, the case could be dismissed. Whistleblowers successful in uncovering a health care fraud scheme are awarded up to 30% of any financial recovery by the federal government.