Written by Zachary Newland, Founding Partner. Last updated July 27, 2026.

DME Fraud: Federal Criminal Exposure for Durable Medical Equipment Suppliers and Providers

If you own, operate, or bill for a durable medical equipment company (“DME”), a federal DME fraud investigation can move from a data flag at CMS to a grand jury indictment faster than most business owners expect. The Department of Justice, FBI, and HHS Office of Inspector General treat Medicare and Medicaid DME billing abuse as a national enforcement priority, and the consequences of a conviction include years in federal prison, restitution orders that can reach into the hundreds of millions of dollars, and permanent exclusion from federal healthcare programs. Understanding how these cases are built, what statutes apply, and what to do if you are contacted by investigators is not optional; it is the difference between preserving your liberty and losing it.

If federal agents have contacted you or you have received a target letter, subpoena, or search warrant related to DME billing, contact Evergreen Attorneys at (303) 948-1489 before responding or producing information.

On This Page

• What Is DME Fraud Under Federal Law?
• Federal Statutes Used in DME Fraud Prosecutions
• How Federal DME Fraud Investigations Work
• Common DME Fraud Schemes Targeted by DOJ and HHS-OIG
• Penalties and Consequences of a Federal DME Fraud Conviction
• What to Do if You Are Under Federal Investigation for DME Fraud
• How Evergreen Attorneys Can Help With Federal DME Fraud Cases
• Frequently Asked Questions

Evergreen Attorneys DME Fraud Defense Team

What Is DME Fraud Under Federal Law?

Durable medical equipment fraud is a category of federal health care fraud defense in which suppliers, telemedicine companies, physicians, or marketers submit false or fraudulent claims to Medicare, Medicaid, or other federal health care programs for equipment such as powered wheelchairs, orthotic braces, CPAP machines, or other covered items.

The fraud can take many forms: billing for equipment never delivered, submitting claims for items that are not medically necessary, using sham telemedicine consultations to generate prescriptions at scale, or paying kickbacks to recruiters who obtain beneficiary information.

There is no single federal statute labeled “DME fraud.” Instead, prosecutors charge these cases under a combination of general federal fraud, conspiracy, and financial statutes, each carrying serious penalties.

Federal Statutes Used in DME Fraud Prosecutions

DOJ and federal prosecutors rely on several overlapping statutes to charge DME fraud schemes:

• 18 U.S.C. Section 1347 (Health Care Fraud): The primary charge in most DME cases. It criminalizes knowingly executing or attempting to execute a scheme to defraud a health care benefit program. A conviction carries up to 10 years in prison, or up to 20 years if the scheme results in serious bodily injury.
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• 42 U.S.C. § 1320a-7b(b) (Anti-Kickback Statute): Prohibits offering, paying, soliciting, or receiving anything of value to induce or reward referrals for services reimbursable by federal health care programs. This statute is frequently charged in DME cases involving marketing companies, call centers, or referral arrangements.
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• 18 U.S.C. § 1343 (Wire Fraud): Used when DME claims, payments, or kickback communications move through interstate electronic communications, including electronic billing submissions.
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• 18 U.S.C. § 1349 (Conspiracy): Charges conspiracy to commit health care fraud or wire fraud. In multi-defendant DME prosecutions, this count often extends liability to owners, managers, and telemedicine participants.
• 18 U.S.C. § 1956 (Money Laundering): Added in larger DME operations where proceeds from fraudulent billing are moved through accounts to conceal their origin or nature.
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Why Is Evergreen Attorneys Different?

Evergreen Attorneys won 9-0 in the U.S. Supreme Court in United States v. Hemani in June 2026, demonstrating the kind of rigorous federal statutory analysis that complex healthcare fraud cases demand.

• We exclusively focus on federal criminal defense and serious crimes.
• We only employ partner-level attorneys
• We keep incredibly small caseloads. Each lead attorney will never have more than 25 cases at a time.

How Federal DME Fraud Investigations Work

Federal DME fraud investigations are typically coordinated among the FBI, HHS-OIG, and sometimes CMS program integrity units. Many of these investigations are part of large, multi-district national healthcare fraud takedowns. The DOJ has reported coordinated enforcement actions involving DME and telemedicine schemes with alleged losses exceeding $1.2 billion.

Investigations commonly begin with one or more of the following triggers:

• CMS data analytics flag abnormal billing patterns, such as a DME supplier billing far more powered wheelchair claims than regional peers.
• A beneficiary or employee files a complaint or a whistleblower files a qui tam action under the False Claims Act.
• An informant or cooperating witness provides information to HHS-OIG or the FBI.

Once flagged, investigators may issue subpoenas for billing records, conduct interviews with suppliers and prescribing physicians, execute search warrants at DME company offices, and present evidence to a federal grand jury. If you receive a federal grand jury subpoena, the investigation is already well underway.

Common DME Fraud Schemes Targeted by DOJ and HHS-OIG

Recent HHS-OIG enforcement actions and DOJ prosecutions describe recurring scheme patterns:

• Sham telemedicine prescriptions: Call centers contact Medicare beneficiaries and arrange brief, often pre-scripted telemedicine consultations. Physicians who never examine the patient sign orders for powered wheelchairs or braces, and DME companies bill Medicare at scale.
• Billing for undelivered equipment: DME suppliers submit claims for items that were never shipped to or received by the beneficiary.
• Medically unnecessary orders: Equipment is prescribed for beneficiaries who do not have a qualifying diagnosis or documented clinical need, and the prescribing physician has no genuine treatment relationship with the patient.
• Kickback-funded marketing: DME companies pay marketers, call centers, or other intermediaries per referral or per signed order, violating the Anti-Kickback Statute.
• Upcoding and inflated claims: Suppliers bill for more expensive equipment categories than what was actually provided.

For example, the HHS-OIG regularly highlights improper DME billing cases like this one from May 2026: https://oig.hhs.gov/fraud/enforcement/illinois-doctor-agrees-to-pay-62500-for-signing-false-orders-in-durable-medical-equipment-scheme/. This illustrates that federal health care fraud charges are not limited to direct Medicare fee-for-service billing; managed care plans are also covered.

Penalties and Consequences of a Federal DME Fraud Conviction

The consequences of a federal DME fraud conviction extend well beyond incarceration:

1. Prison sentences: Health care fraud under 18 U.S.C. § 1347 carries up to 10 years per count (20 years if serious bodily injury results). Wire fraud carries up to 20 years. Money laundering carries up to 20 years. Sentences in large DME schemes have exceeded 10 years for organizers.
2. Restitution and forfeiture: Courts routinely order full restitution to the defrauded federal program and forfeiture of proceeds, bank accounts, and assets traceable to the scheme.
3. Program exclusion: A conviction triggers mandatory exclusion from Medicare, Medicaid, and all federal health care programs, effectively ending a healthcare career or business.
4. Civil False Claims Act liability: Parallel civil enforcement can result in treble damages and per-claim penalties.
5. Professional and reputational destruction: Medical licenses, supplier certifications, and professional standing are typically lost.

Because prosecutors often charge multiple statutes and add conspiracy counts, cumulative sentencing exposure in a multi-defendant DME case can be severe.

What to Do if You Are Under Federal Investigation for DME Fraud

If you receive a target letter, a grand jury subpoena, or a visit from FBI or HHS-OIG agents related to your DME company or billing practices, the steps you take immediately will shape your exposure:

1. Do not speak to federal agents or investigators without counsel present. Anything you say can be used against you, and false statements to federal agents are independently criminal under 18 U.S.C. § 1001.
2. Do not destroy, alter, or conceal billing records, patient files, marketing agreements, or communications. Obstruction of justice and evidence tampering carry separate federal charges.
3. Retain experienced federal white collar crime lawyers immediately. Early intervention by defense counsel can influence whether the government seeks an indictment, offers a cooperation agreement, or narrows its charges.
4. Preserve all electronic data, including emails, text messages, billing software records, and telemedicine platform logs.
5. Identify and segregate documents that may be protected by attorney-client privilege before responding to any subpoena.
6. Do not discuss the investigation with business partners, employees, or co-owners without guidance from counsel, as joint-defense considerations and potential conflicts must be evaluated.

The window between an initial contact and a formal charge is often the most critical period for defense strategy.

How Evergreen Attorneys Can Help With Federal DME Fraud Cases

Evergreen Attorneys focuses exclusively on federal fraud crimes defense, including healthcare fraud, Medicare fraud, and Anti-Kickback Statute violations involving DME suppliers, telemedicine companies, and prescribing physicians.

Zachary Newland has appeared as counsel of record in more than 120 federal cases since 2016, with specific expertise in white collar investigations, federal trials, and multi-agency enforcement matters.

The firm can evaluate the government’s billing data and medical necessity evidence, advise on subpoena and search warrant responses, negotiate with DOJ and HHS-OIG investigators during the pre-indictment phase, challenge the sufficiency of fraud allegations at trial, and pursue sentencing advocacy designed to minimize exposure when conviction or a plea agreement is the likely outcome. Evergreen Attorneys represents DME owners, executives, physicians, and telemedicine contractors in federal districts nationwide.

Frequently Asked Questions

What distinguishes federal DME fraud from civil Medicare billing disputes?

A civil Medicare billing dispute typically involves CMS overpayment recovery, administrative appeals, or False Claims Act litigation where the government seeks financial penalties. Federal criminal DME fraud requires proof beyond a reasonable doubt that the defendant knowingly and willfully executed or participated in a scheme to defraud a federal health care program. The key distinction is intent: prosecutors must show that the defendant acted with knowledge that claims were false or fraudulent, not merely that billing errors occurred. A criminal conviction results in imprisonment, restitution, and mandatory program exclusion, while a civil case results only in financial liability.

Can a physician face federal charges for signing DME orders?

Yes. Physicians who sign orders for durable medical equipment without conducting a genuine medical examination, without verifying medical necessity, or in exchange for payment can face charges under the health care fraud statute (18 U.S.C. § 1347) and the Anti-Kickback Statute (42 U.S.C. § 1320a-7b). In recent national takedowns, DOJ has charged telemedicine physicians who signed thousands of DME orders based on cursory or scripted consultations arranged by marketing companies.

How does the government use data analytics to identify DME fraud targets?

CMS and HHS-OIG use claims data to identify suppliers with billing patterns that deviate significantly from geographic or specialty norms. Red flags include unusually high volumes of powered wheelchair claims, billing for items with low documented medical necessity rates, a disproportionate share of claims originating from a small number of referring physicians, and high rates of claims for beneficiaries in areas far from the supplier’s location. According to CMS guidance on preventing fraud, waste, and abuse in Medicaid home health and DME, providers are expected to maintain complete documentation of eligibility, medical necessity, and delivery. Gaps in this documentation become evidence in criminal investigations.

When should a DME supplier or healthcare provider involve federal defense counsel?

You should retain federal criminal defense counsel as soon as you become aware of federal investigative interest in your business. Specific triggers include receiving a target letter from a U.S. Attorney’s office, being served with a grand jury subpoena for billing records, learning that employees or business partners have been interviewed by the FBI or HHS-OIG, or being contacted by agents seeking a voluntary interview. Early representation allows counsel to protect your rights during the investigation, advise on document preservation and privilege, and engage with prosecutors before charging decisions are made.

If you are facing a federal DME fraud investigation or charges, contact Evergreen Attorneys for a confidential case evaluation today. Call us immediately at 303-948-1489 or send us an email to [email protected] today.