In 2023, the United States indicted Brett Blackman, of Johnson County, Kansas, Gary Cox, of Maricopa County, Arizona, and Gregory Schreck, of Johnson County, Kansas, with conspiracy to commit healthcare fraud and wire fraud; conspiracy to pay and receive kickbacks; and conspiracy to defraud the United States and make false statements, in connection with the submission of $1.9 billion in false and fraudulent claims to Medicare and other government insurers for orthotic braces, prescription skin creams, and other items that were medically unnecessary and ineligible for Medicare reimbursement.
The indictment alleged that these three individuals owned and operated DMERx, an internet-based platform. The indictment alleged that they programmed DMERx to generate false and fraudulent doctors’ orders to defraud Medicare and other federal healthcare benefit programs of over a billion dollars. In late February of 2025, defendant Gregory Schreck, pleaded guilty to conspiracy to defraud the United States government. Details of the healthcare fraud plea are provided below.
Healthcare Fraud Conspiracy: A Difficult Admission
Defendant Schreck, in his healthcare fraud guilty plea, admitted that he and his co-conspirators used DMERx to target hundreds of thousands of Medicare beneficiaries to provide their personally identifiable information, and then agree to accept medically unnecessary orthotic braces, pain creams, and other items through misleading mailers, television advertisements, and calls from offshore call centers.
The elaborate healthcare fraud conspiracy involved a multi-step process: First, Schreck would offer to connect pharmacies, durable medical equipment (DME) suppliers, and marketers with telemedicine companies. Co-conspirators at the DME suppliers and pharmacies would instruct the telemarketing companies to solicit the beneficiaries for the braces, pain creams, and other items that received the highest reimbursement from federal healthcare plans.
The telemedicine companies would then accept illegal kickbacks and bribes in exchange for signed doctors’ orders – orders that were transmitted using the DMERx platform.
In return for coordinating the illegal kickback transactions and referring the completed doctors’ orders to the DME suppliers, pharmacies, and telemarketers that paid for them, Schreck and his co-conspirators would receive payments. A healthcare fraud conspiracy fee, essentially.
Healthcare Fraud Conspiracy: Doctors’ Orders
The fraudulent doctors’ orders generated by DMERx falsely represented that a doctor had examined and treated the Medicare beneficiaries (the individuals who provided their personally identifiable information) when, in reality, purported (e.g., claimed, not really) telemedicine companies paid doctors to sign the orders without regard to medical necessity and based only on a brief telephone call with the beneficiary, or sometimes no interaction with the beneficiary at all. The DME suppliers and pharmacies that paid illegal kickbacks in exchange for these doctors’ orders generated through DMERx billed Medicare and other insurers more than $1 billion. Medicare and the insurers paid more than $360 million based on these false and fraudulent claims.
Healthcare Fraud Conspiracy: Hear My Plea
Defendant Schreck has pleaded guilty to conspiracy to commit health care fraud and faces a maximum penalty of 10 years in prison. A sentencing hearing will be scheduled at a later date. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other federal law regarding sentencing.
Compliancy Group Software Offers Healthcare Fraud Prevention Training
Compliancy Group’s healthcare compliance tracking solution software, The Guard, offers a Fraud, Waste, and Abuse training module that can assist regulated entities with meeting their obligations to provide federal healthcare program fraud, waste, and abuse training to employees. Contact us today for more information about our compliance software, training, and other innovative tools.
