On February 20, 2025, Gregory Schreck, 50, of Johnson County, Kansas, pleaded guilty to orchestrating an internet-based operation that defrauded Medicare and other federal health care benefit programs of more than $1 billion. Schreck, vice president at healthcare software and services company DMERx, was involved in generating fraudulent doctors’ orders for medically unnecessary items, such as orthotic braces and pain creams, to hundreds of thousands of Medicare beneficiaries.
According to court documents, Schreck and his co-conspirators used the DMERx platform to target Medicare beneficiaries through misleading mailers, television advertisements, and phone calls from offshore call centers urging them to provide their personal information and accept medically unnecessary products. These products, including orthotic braces and pain creams, were promised in exchange for the beneficiaries’ consent. Schreck and his co-conspirators generated false doctors’ orders for these items, which were then used to bill Medicare and other insurers. The orders claimed that doctors had examined the beneficiaries when, in reality, the orders were based on brief phone calls, or sometimes no interaction at all, between telemedicine companies and the beneficiaries.
Schreck admitted to offering illegal kickbacks and bribes to pharmacies, durable medical equipment (DME) suppliers, and marketers, in exchange for their involvement in this fraudulent scheme. These kickbacks were funneled through telemedicine companies that would sign off on doctors’ orders without regard for medical necessity, enabling Schreck and his co-conspirators to profit.
Through DMERx, Schreck and his co-conspirators generated false claims that led to more than $1 billion in fraudulent billing to Medicare and other insurers. Medicare and the insurers paid over $360 million based on these fraudulent claims.
Schreck pleaded guilty to conspiracy to commit health care fraud, a charge that carries a maximum penalty of 10 years in prison. Schreck’s co-conspirators are also facing legal action as investigators continue to pursue the case.
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