A federal court sentenced Oklahoma chiropractor Mark Loftis, 39, to 14 years in prison for a scheme that billed Medicare, TRICARE and CHAMPVA more than $30 million for braces and glucose monitors. The Justice Department announced the sentence on Oct. 9, saying it was imposed the day before.
Loftis, of Cushing, Oklahoma, owned Back Pain Home Supplies LLC, which did business as EZ Medical Supply. A jury in the Middle District of Florida convicted him in July of conspiracy to commit health care fraud and wire fraud after a 12-day trial. The court also ordered him to pay more than $8 million in restitution and forfeit more than $560,000.
How the Durable Medical Equipment Fraud Worked
Prosecutors said Loftis ran a pipeline that started with personal data. According to the Justice Department’s conviction announcement, he bought insurance and personal information about elderly and disabled people through marketers and call centers. That data fed orders from telemedicine doctors and nurse practitioners. The orders covered orthotic braces and continuous glucose monitors.
The department said the clinicians who signed them did not examine the patients and often never spoke with them. The department said Loftis bought those orders, so the paperwork behind each claim did not reflect a clinician’s judgment about the patient. The sentencing release gives one example of the billing pattern. Loftis and his co-conspirators frequently billed for several braces at once, including eight braces for a single beneficiary.
Loftis also hid who ran the company, the department said. He and his co-conspirators did not disclose the ownership and management of EZ Medical Supply to Medicare. They also hid that suppliers not enrolled in the program were billing claims through his company. The kickbacks went to marketers, purported telemedicine companies and a call center. The department said they totaled more than $1 million and moved in part through a shell marketing company.
What Prosecutors Said about the Victims
The department said the scheme ran for three years despite complaints from beneficiaries and their families. Many of those beneficiaries had dementia or Alzheimer’s disease, according to the conviction release.
Colin M. McDonald, assistant attorney general for the Justice Department’s National Fraud Enforcement Division, said in the sentencing release that the sentence “shows that health care fraud does not pay.” After the verdict he said the defendant “turned private medical data into a pipeline for personal profit.”
Cheryl L. Mason, inspector general of the Department of Veterans Affairs, said in the same release that VA fraud schemes “divert funds from veterans who rely on these benefits.” TRICARE covers military families and CHAMPVA covers certain family members of veterans, so the claims reached programs built for those groups.
Nakia M. Alexander, acting special agent in charge of the Defense Criminal Investigative Service Southeast Field Office, said the case affected service members and their families. The Justice Department release did not include a statement from Loftis.
The Numbers Behind the 14-Year Term
The figures in the case allow a few comparisons. The department said the claims totaled more than $30 million and the programs paid more than $8 million. That means roughly 27 cents of every billed dollar came back as a payment. The rest was billed and not paid. Spread across the three years the scheme ran, $30 million in claims works out to about $830,000 billed every month. The $8 million paid averages about $222,000 a month over the same 36 months.
The kickbacks look small beside those totals. At more than $1 million, they equal about 12.5% of the $8 million paid. The department said Loftis personally obtained more than $8 million, so the payments to marketers, call centers and telemedicine companies came out of the same pool.
The statutory ceiling for the offense of conviction is 20 years. A 14-year sentence is 168 months against a 240-month maximum, or 70% of the cap. The department said in the conviction announcement that a judge decides a sentence under the U.S. Sentencing Guidelines and other statutory factors. The restitution order also sits close to the amount paid. At more than $8 million, it matches the department’s figure for what the programs actually paid out. The forfeiture of more than $560,000 is separate.
How the Case Reached Sentencing
The January indictment was unsealed on Jan. 8. It charged four counts: conspiracy to commit health care fraud and wire fraud, conspiracy to defraud the United States and pay and receive kickbacks, and two counts of theft of government property.
The indictment also alleged Loftis received more than $133,000 from the federal CARES Act Provider Relief Fund and falsely attested to the conditions for keeping it. The department said at the time that an indictment is only an allegation. The July release describes convictions on the health care fraud and wire fraud conspiracy. It does not list the individual counts.
The case came from four agencies: the Department of Health and Human Services Office of Inspector General, the FBI, the Defense Criminal Investigative Service and the VA Office of Inspector General. Catherine Wagner, an assistant deputy chief, and Trial Attorney Raymond Beckering III of the Health Care Fraud Section prosecuted it.
Miranda L. Bennett, acting deputy inspector general for investigations at the HHS Office of Inspector General, said the verdict and sentence show such schemes will meet “decisive action and significant consequences.” Rodney Crawford, special agent in charge of the FBI Tampa Field Office, said health care fraud drains federally funded programs of millions of dollars.
Why the Sentence Fits the Division’s New Fraud Playbook
The sentence arrived the same week McDonald issued Directive 26-13, a memo telling fraud prosecutors how to run cases. The directive says prosecutors “must not be mechanical at sentencing.” It tells them to argue for general deterrence, seek all supported Guidelines enhancements and ask for upward variances where warranted.The memo also tells prosecutors to pursue full restitution, forfeiture and fines. The Loftis sentence includes restitution and forfeiture. The release does not mention a fine.
The department’s announcement of the directive cited a Government Accountability Office estimate that the federal government loses between $233 billion and $521 billion a year to fraud. Against the low end of that range, the $30 million billed in the Loftis case equals about 0.013% of annual losses. Against the high end it is about 0.006%. The directive says guidance in it creates no enforceable rights. The memo is dated Oct. 7, and the Loftis sentence followed it by one day.
