Federal prosecutors said operators of the fraudulent scheme swindled taxpayers out of $2.1 billion. File Photo by Quince Media/Pixabay/UPI

Sept. 27 (UPI) -- The U.S. Justice Department announced Friday authorities have arrested and charged 35 people with running phony cancer facilities and billing Medicare for nearly $3 billion.

Prosecutors said the defendants operated so-called "CGx facilities" and telemedicine firms nationwide in a scheme to collect $2.1 billion in Medicare payments from the federal government.


The department called it "one of the largest healthcare fraud schemes ever charged."

The charges wrap a monthlong series of arrests involving operators who collected the money and distributed 50 million controlled-substance pills, the department said. More than 100 defendants face opioid-related charges.

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"The coordinated federal investigation targeted an alleged scheme involving the payment of illegal kickbacks and bribes by CGx laboratories in exchange for the referral of Medicare beneficiaries by medical professionals working with fraudulent telemedicine companies for expensive cancer genetic tests that were medically unnecessary," the department said in a statement.

Test results were often not provided to patients, who prosecutors say were typically elderly or disabled. Investigators said physicians were paid by the CGx testing firms to prescribe by telephone, with no actual interaction with patients.

"These defendants allegedly duped Medicare beneficiaries into signing up for unnecessary genetic tests, costing Medicare billions of dollars," said Assistant Attorney General Brian A. Benczkowski.

The arrests include nine doctors and were made in five federal districts. The Justice Department's Criminal Division, the FBI and the U.S. Department of Health and Human Services Office of the Inspector General were involved in the investigation. The Centers for Medicare and Medicaid Services also took action against testing companies that submitted more than $1.7 billion in Medicare claims.

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