$100 Million Medicare Fraud Scheme Involving Medical Equipment Kickbacks

A business owner was found guilty of orchestrating a massive fraud scheme that defrauded Medicare and other insurers by billing for unnecessary medical equipment, pocketing over $10 million in illicit proceeds.

NEWARK, NJ – A federal jury convicted Raheel Naviwala, 36, of Coral Springs, Florida, for his role in a $100 million durable medical equipment (DME) fraud scheme, United States Attorney John Giordano announced. The verdict, delivered on February 28, 2025, followed a month-long trial before U.S. District Judge Michael E. Farbiarz in Newark.

Naviwala, who owned marketing companies and a DME supply company, was found guilty of conspiracy to commit health care fraud and wire fraud, health care fraud, conspiracy to violate the Anti-Kickback Statute, and three counts of illegal kickbacks. He was acquitted of two counts of healthcare fraud. He now faces a maximum potential sentence of decades in federal prison.

“The scheme Naviwala and his co-conspirators created to steal money from the government was complex and expansive,” FBI Acting Special Agent in Charge Terence G. Reilly said. “However, FBI Newark and our law enforcement partners have the expertise and grit to dig through mountains of data and find the fraudsters. We want this case to serve as a warning to anyone hoping to capitalize on hiding under the red tape - we are still here, and you will eventually get caught.”

How the Scheme Worked

According to prosecutors, Naviwala and his associates illegally acquired lists of Medicare patients’ names, addresses, and phone numbers and hired telemarketers to contact the patients and persuade them to order orthotic braces—regardless of medical necessity.

• Pre-filled Prescriptions: Telemarketers filled out prescriptions for braces and selected the most expensive options to maximize billing.
• Telemedicine Exploitation: Naviwala paid telemedicine doctors to sign these prescriptions, often without speaking to or evaluating the patients.
• Fraudulent Billing: These signed prescriptions were then sold to DME supply companies, which submitted claims to Medicare, TRICARE, and other insurance providers.

Naviwala also operated a DME supply company that billed Medicare directly. In some cases, claims were submitted for up to nine braces per patient, vastly exceeding medical necessity.

To hide the scheme, Naviwala and his co-conspirators used sham contracts and fake invoices, falsely claiming that payments between companies were for marketing or consulting services. He also registered multiple businesses under nominee owners, who did little to no legitimate work but were compensated to disguise Naviwala’s involvement.

“The defendant convicted in this case prioritized greed over the provision of appropriate health care services to patients, bilking the federal government for medically unnecessary durable medical equipment,” stated Special Agent in Charge Naomi Gruchacz with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “HHS-OIG will continue to work with our law enforcement partners to ensure the integrity of the federal health care system and hold accountable owners and providers engaging in fraud that targets its programs.”

$100 Million in Fraudulent Claims

The scheme resulted in Medicare and other insurers paying out at least $100 million for unnecessary DME. Naviwala personally profited more than $10 million.

Potential Sentencing and Legal Consequences

Naviwala faces severe penalties for his crimes:

• Conspiracy to commit health care fraud and wire fraud – up to 20 years in prison
• Health care fraud – up to 10 years in prison
• Conspiracy to violate the Anti-Kickback Statute – up to 5 years in prison
• Each count of illegal kickbacks – up to 10 years in prison per count

Sentencing is scheduled for July 29, 2025, at 10:00 a.m. before Judge Farbiarz in Newark.

Investigation and Prosecution

The case was investigated by multiple federal agencies, including:

• FBI (Newark Division) – Acting Special Agent in Charge Terence G. Reilly
• HHS-OIG (Health and Human Services – Office of Inspector General) – Special Agent in Charge Naomi Gruchacz
• DCIS (Defense Criminal Investigative Service) – Special Agent in Charge Patrick J. Hegarty
• U.S. Department of Veterans Affairs – Office of Inspector General – Special Agent in Charge Christopher F. Algieri

The government’s case was prosecuted by Assistant U.S. Attorneys Elaine K. Lou, Matthew Specht, and Aaron L. Webman in Newark.

“Investigating corrupt schemes that undermine the integrity of TRICARE, the healthcare system for military members and their families, is a top priority for the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service (DCIS),” stated Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. “Mr. Naviwala’s illegal schemes put the TRICARE program and its beneficiaries at risk. We are committed to working with our partner agencies and the Department of Justice to pursue those individuals who selfishly place personal gain over the safety and care of TRICARE beneficiaries.”

Ongoing Efforts to Combat Health Care Fraud

This case underscores federal law enforcement's commitment to cracking down on healthcare fraud. The use of sham telemedicine services, fraudulent medical equipment billing, and kickback schemes has been an increasing concern for Medicare and other insurers. Authorities continue to monitor and prosecute illegal activities that exploit government health programs, ensuring fraudulent operators are held accountable.

For patients, providers, and insurers, this case serves as a stark reminder of the risks of fraudulent healthcare schemes and the ongoing enforcement efforts to protect public funds.