Seventh Circuit Considers When Legal Marketing Transforms Into Illegal Kickbacks

Seventh Circuit Considers When Legal Marketing Transforms Into Illegal Kickbacks

On December 4, the US Court of Appeals for the Seventh Circuit heard oral arguments regarding whether the January 2023 jury conviction of Mark Sorensen, the owner of SyMed, a durable medical equipment distributor, for orchestrating a $25 million kickback scheme should be vacated.

According to the US Department of Justice (DOJ), the scheme involved Sorensen purchasing patient leads from a broker between 2015 and 2018 and then tricking patients into receiving unnecessary medical braces and pressuring doctors to authorize prescriptions for the braces. The scheme allegedly resulted in $87 million in fraudulent Medicare billing and $23.6 million in payments received by the federal government. Sorensen’s appeal urges the Circuit Court to vacate his conviction because, among other things, the allegedly illegal referrals were from advertisers or manufacturers engaged in legal marketing tactics rather than attempting to improperly or illegally influence prescribing.

The Seventh Circuit has not addressed when legal marketing and advertising turn into illegal kickbacks. Circuit Judges David Hamilton, Candace Jackson-Akiwumi, and Doris Pryor sat on the panel. The case is USA v. Mark Sorensen, case number 24-1557, in the US Circuit Court of Appeals for the Seventh Circuit.

Texas Podiatrist and Patient Recruiter Sentenced to Prison for $8.5 Million TRICARE Fraud Scheme

On December 4, Texas podiatrist Brian Carpenter and patient recruiter Lee Hawrylak were sentenced for their roles in a fraudulent scheme to submit claims for medically unnecessary pain and scar creams that were procured through kickbacks and bribes. The pair were convicted by a jury in the Northern District of Texas in April 2023. They were convicted of one count of conspiracy to commit health care fraud and six counts of health care fraud. Carpenter was sentenced to 45 months in prison and Hawrylak was sentenced to 60 months in prison.

According to court documents, the DOJ alleged that Hawrylak enlisted Carpenter to sign prescriptions for patients he had never examined or treated while TRICARE beneficiaries agreed to accept the medically unnecessary creams. The DOJ alleged that from November 2014 until January 2017, Carpenter and Hawrylak, aided by a Fort Worth pharmacy, caused TRICARE to be billed for $8.5 million.

The DOJ’s press release can be found here.

Michigan Woman Convicted in $1.4 Million Medicare Kickback Scheme

On November 22, Mary Smettler-Bolton of Michigan was convicted for her role in a scheme to defraud Medicare and receive illegal kickbacks. According to court documents, the DOJ alleged that Smettler-Bolton referred Medicare beneficiaries to home health companies in exchange for monetary kickbacks from owners and operators of the companies. The DOJ alleged that Smettler-Bolton and her co-conspirators defrauded the government of more than $1.4 million.

Smettler-Bolton faces a maximum penalty of five years in prison for conspiring to defraud the government and receive illegal kickbacks and a maximum penalty of 10 years in prison for violating the Anti-Kickback Statute. Smettler-Bolton is expected to be sentenced in March 2025.

The DOJ’s press release can be found here.