The CEO of a healthcare software company has been found guilty of orchestrating a large-scale Medicare fraud operation that exploited telemedicine services and durable medical equipment (DME) claims, resulting in over $1 billion in false billings.

A federal jury convicted Gary Cox, 79, CEO of Power Mobility Doctor Rx LLC (DMERx), for his role in running an internet-based platform that generated fraudulent doctors’ orders for medically unnecessary items such as orthotic braces and topical creams. The Maricopa County, Arizona-based executive now faces multiple felony counts, including conspiracy to commit healthcare fraud and wire fraud, as well as charges related to illegal kickbacks.

Evidence presented at trial revealed that Cox and his co-conspirators acquired Medicare beneficiaries’ personal data through misleading marketing and routed it through DMERx to create fraudulent orders. These orders falsely indicated physician oversight, often based on brief calls or no interaction with patients at all. The orders were then sold to DME suppliers and pharmacies, who submitted them to Medicare and other insurers. More than $360 million was paid out on these claims.
Cox’s operation linked marketers and suppliers with telemedicine providers who were paid kickbacks in exchange for physician signatures. Prosecutors said sham contracts were used to mask the flow of payments, and documentation was deliberately edited to avoid scrutiny from Medicare auditors.

“The defendant orchestrated a scheme to defraud government health care benefit programs on a massive scale,” said Matthew R. Galeotti, head of the Justice Department’s Criminal Division.

Cox was convicted on six charges and faces up to 20 years in prison for the most serious count. Sentencing has not yet been scheduled.

The investigation was led by HHS-OIG, the FBI, the Department of Veterans Affairs OIG, and the Defense Criminal Investigative Service. The case was prosecuted by the Justice Department’s Fraud Section, which leads the Health Care Fraud Strike Force Program.

U.S. Healthcare Homepage