Office of Public Affairs | CEO of Health Care Software Company Sentenced for $1B Fraud Conspiracy
An Arizona man was sentenced Friday to 15 years in prison and ordered to pay more than $452 million in restitution for conspiring to defraud Medicare and other federal health care benefit programs of more than $1 billion by operating a platform that generated false doctors’ orders used to support fraudulent claims for various medical items.
“This just sentence is the result of one of the largest telemarketing Medicare fraud cases ever tried to verdict,” said Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division. “Telemedicine scammers who use junk mailers, spam calls and the internet to target senior citizens steal taxpayer money and harm vulnerable populations. The Criminal Division will continue dedicating substantial resources to the fight against telemedicine and medical equipment frauds that drain our health care benefit programs.”
“Together with our partners, the FBI will aggressively pursue those who defraud taxpayer funded health care programs,” said Acting Assistant Director Rebecca Day of the FBI’s Criminal Investigative Division. “Programs like Medicare are intended to help the most vulnerable among us, and fraud schemes like the one orchestrated by the defendant can jeopardize the delivery of critical care to those who need it the most.”
“This sentence sends a clear message: those who exploit telemedicine to prey on seniors and steal from taxpayer-funded health care programs will be held accountable,” said Deputy Inspector General for Investigations Christian J. Schrank of the U.S. Department of Health and Human Services, Office of Inspector General (HHS-OIG). “This scheme was a massive betrayal of trust, built on deception and greed. Our investigators, working with law enforcement partners, dismantled this billion-dollar fraud operation that targeted vulnerable patients and undermined the integrity of Medicare. We will not relent in our mission to protect the public and safeguard Medicare and other federal health care programs from fraud, waste, and abuse.”
“This investigation underscores the Defense Criminal Investigative Service’s (DCIS) commitment to protecting the integrity of the TRICARE program and ensuring that taxpayer-funded military health benefits are not exploited for personal gain,” said Special Agent in Charge Jason Sargenski of DCIS’s Southeast Field Office. “Fraud schemes that siphon resources from TRICARE directly undermine the care promised to service members and their families. As the criminal investigative arm of DoD’s Office of Inspector General, DCIS remains focused on disrupting these schemes and holding responsible parties accountable.”
According to court documents and evidence presented at trial, Gary Cox, 79, of Maricopa County, was the CEO of Power Mobility Doctor Rx, LLC (DMERx). Cox and his co-conspirators targeted hundreds of thousands of Medicare beneficiaries who provided their personally identifiable information and agreed to accept medically unnecessary orthotic braces, pain creams and other items through misleading mailers, television advertisements and calls from offshore call centers. Cox and his co-conspirators owned, controlled and operated DMERx, an internet-based platform that generated false and fraudulent doctors’ orders for these items. As part of the scheme, Cox connected pharmacies, durable medical equipment (DME) suppliers and marketers with telemedicine companies that would accept illegal kickbacks and bribes in exchange for signed doctors’ orders transmitted using the DMERx platform. Cox and his co-conspirators received payments for coordinating these illegal kickback transactions and referring the completed doctors’ orders to the DME suppliers, pharmacies and telemarketers that paid kickbacks and bribes for the orders.
The fraudulent doctors’ orders generated by DMERx falsely represented that a doctor had examined and treated the Medicare beneficiaries when, in fact, purported telemedicine companies paid doctors to sign the orders without regard to medical necessity, based only on a brief telephone call with the beneficiary or no interaction with the beneficiary at all. The DME suppliers and pharmacies that paid illegal kickbacks in exchange for these doctors’ orders billed Medicare and other insurers more than $1 billion, and Medicare and the insurers paid more than $360 million based on these claims. According to evidence presented at trial, Cox and his co-conspirators concealed the scheme through sham contracts and by eliminating from doctors’ orders what one co-conspirator described as “dangerous words” that might cause Medicare to audit the scheme’s DME suppliers.
In June 2025, Cox was convicted of conspiracy to commit health care fraud and wire fraud, three counts of health care fraud, conspiracy to pay and receive health care kickbacks and conspiracy to defraud the United States and make false statements in connection with health care matters.
The FBI, HHS-OIG, VA-OIG and DCIS investigated the case.
Trial Attorneys Darren C. Halverson and Jennifer E. Burns of the Criminal Division’s Fraud Section prosecuted the case. Fraud Section Trial Attorney Shane Butland assisted in the prosecution. Trial Attorney Evan N. Schlom with the Fraud Section’s Special Matters Unit provided valuable assistance.
The Fraud Section leads the Criminal Division’s efforts to combat health care fraud through the Health Care Fraud Strike Force Program. Since March 2007, this program, currently comprised of nine strike forces operating in 27 federal districts, has charged more than 5,800 defendants who collectively have billed federal health care programs and private insurers more than $30 billion. In addition, the Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to hold providers accountable for their involvement in health care fraud schemes. More information can be found at www.justice.gov/criminal-fraud/health-care-fraud-unit.
