Healthcare Software VP Pleads Guilty in $1 Billion Medicare Fraud Scheme

February 26, 2025 | JacobiJournal.com — Healthcare Software VP Pleads Guilty: A Kansas man has pleaded guilty to orchestrating a massive Medicare fraud scheme that scammed the government out of over $1 billion, officials said.

The Medicare fraud scheme orchestrated by Gregory Schreck involved a complex network of software platforms, telemedicine providers, and suppliers that exploited vulnerabilities in the healthcare system. By generating fraudulent medical orders and billing Medicare for unnecessary products, the scheme funneled hundreds of millions of dollars to the conspirators, highlighting the scale and sophistication of modern healthcare fraud.

How the Fraud Worked

Healthcare Software VP Pleads Guilty: Gregory Schreck, a former vice president at a healthcare software company, helped run DMERx, an internet-based platform that generated fraudulent doctors’ orders for medical braces, pain creams, and other supplies.

To find patients, Schreck and his co-conspirators used misleading ads, direct mail, and offshore call centers. They convinced Medicare beneficiaries to share personal details and accept unnecessary medical products.

Bribery and Fake Medical Orders

Rather than conduct real medical evaluations, DMERx partnered with telemedicine companies willing to accept bribes. Doctors signed orders without seeing patients, often based on a brief call—or no interaction at all.

Schreck’s team then sold these fake orders to DME suppliers, pharmacies, and telemarketers, who paid kickbacks for the documents. These businesses later billed Medicare and other insurers, collecting more than $360 million in fraudulent claims.

Legal Consequences

Schreck pleaded guilty to conspiracy to commit healthcare fraud. He now faces up to 10 years in prison. A federal judge will decide his sentence based on legal guidelines and case details.

Ongoing Investigation

The FBI, HHS-OIG, VA-OIG, and DCIS continue investigating the case.

Read the full DOJ statement here.

New Update: DMERx Medicare Fraud Executives Receive 15- and 19-Year Prison Sentences in $1 Billion Scheme

The federal prosecution involving healthcare software executive Gregory Schreck has expanded into a series of major convictions and prison sentences against other leaders of the DMERx Medicare fraud operation. On October 14, 2026, Brett Blackman, 43, of Johnson County, Kansas, was sentenced to 19 years in federal prison for his role in operating a healthcare software platform that facilitated more than $1 billion in fraudulent medical equipment claims.

The U.S. Department of Justice announced the sentence on October 15, describing the prosecution as a significant enforcement action against an extensive telemedicine fraud network. Blackman owned and controlled HealthSplash, a healthcare technology company that acquired Power Mobility Doctor Rx, LLC, known as DMERx, in September 2017. Federal prosecutors established that the operation connected marketers, pharmacies, durable medical equipment suppliers, and purported telemedicine companies through an internet-based platform that generated fraudulent medical orders.

The orders were used to support claims for medically unnecessary orthotic braces and other products supplied to Medicare beneficiaries. Following a lengthy federal jury trial that concluded in April 2026, Blackman was convicted of conspiracy to commit healthcare fraud and wire fraud, conspiracy involving illegal healthcare kickbacks, and conspiracy to defraud the United States and make false statements concerning healthcare matters. His 19-year prison sentence represents one of the most substantial penalties imposed in the DMERx prosecution. It also marks an important development from the original February 2025 report, which focused primarily on Schreck’s guilty plea and the fraudulent billing practices associated with the platform.

The October 2026 sentencing followed another major outcome involving Gary Cox, the former chief executive of DMERx. A federal jury convicted Cox in June 2025 of participating in the healthcare fraud conspiracy, including substantive healthcare fraud offenses and conspiracies involving illegal kickbacks and false statements. In December 2025, Cox was sentenced to 15 years in federal prison for his involvement in the operation. Prosecutors established that Cox and his associates helped create a system in which physicians were paid to authorize medical orders without conducting legitimate patient evaluations.

Some beneficiaries received only brief telephone consultations, while others had no meaningful contact with the physicians whose names appeared on the prescriptions. The operation relied on misleading advertising, offshore call centers, and financial incentives to generate large numbers of medical equipment orders that could be submitted for reimbursement. Federal trial evidence demonstrated that the conspirators also attempted to conceal fraudulent activity through misleading contractual arrangements and modifications to medical documentation intended to reduce the likelihood of Medicare audits.

The financial scope of the operation became clearer during subsequent proceedings. In the October 2026 sentencing announcement, the Department of Justice reported that the conspirators submitted more than $1 billion in fraudulent claims and that Medicare and other insurers paid more than $450 million. This payment figure is higher than the $360 million reported when Schreck pleaded guilty in February 2025. The updated amount reflects information disclosed during later proceedings and should not be confused with the total value of claims submitted.

The investigation also established the substantial impact of the DMERx operation on Medicare beneficiaries. According to federal prosecutors, the fraudulent scheme generated orthotic brace claims involving more than 346,000 Medicare beneficiaries, with an average of approximately four braces billed per beneficiary. More than 1,200 beneficiaries were associated with claims for at least 21 orthotic devices each. These findings illustrate how fraudulent medical ordering systems can exploit patient information on a large scale while generating reimbursement claims that are disconnected from actual medical needs.

The operation also demonstrates the risks associated with illegal referral payments and insufficient verification of physician-patient relationships. Legitimate telemedicine services remain an important component of healthcare delivery, but remote consultations must satisfy applicable medical necessity, documentation, and prescribing requirements. Software platforms that facilitate medical orders must not substitute financial incentives or automated processing for independent clinical judgment. For healthcare organizations, the prosecution reinforces the importance of reviewing referral arrangements, monitoring unusual prescribing patterns, verifying medical documentation, and investigating relationships involving high-volume medical equipment suppliers.

Gregory Schreck’s February 2025 guilty plea remains a separate criminal proceeding within the broader DMERx prosecution. He admitted participating in the conspiracy and faced a maximum statutory penalty of 10 years in prison, but the official announcements reviewed for this October 2026 update do not establish a confirmed sentencing outcome for him.

The verified developments are the 15-year sentence imposed on Cox and the 19-year sentence imposed on Blackman, together with the expanded evidence concerning fraudulent claims and insurer payments. These outcomes demonstrate the federal government’s continued pursuit of executives and organizations responsible for large-scale healthcare billing fraud.

For additional information, read the U.S. Department of Justice’s October 15, 2026 announcement detailing Brett Blackman’s 19-year prison sentence and the DMERx Medicare fraud operation.

FAQs: About the Medicare Fraud Scheme

What was the Medicare fraud scheme involving DMERx?

The scheme used a software platform to create fraudulent doctors’ orders for braces, creams, and medical supplies, which were then billed to Medicare and insurers.

How did the Medicare fraud scheme recruit patients?

Fraudsters used ads, mailers, and offshore call centers to persuade Medicare beneficiaries to share personal information and accept unnecessary medical products.

What role did telemedicine play in the Medicare fraud scheme?

Telemedicine providers were bribed to approve medical orders without proper evaluations, allowing fraudulent suppliers to bill Medicare for services never rendered.

What penalties does the healthcare software VP face in the Medicare fraud scheme?

Gregory Schreck pleaded guilty to conspiracy to commit healthcare fraud and faces up to 10 years in prison, with sentencing to be determined by a federal judge.

Who is most responsible for Medicaid fraud?

While multiple parties can be involved, individuals in leadership positions—such as executives, managers, or healthcare providers—who orchestrate schemes or approve fraudulent billing are often held most responsible. In this case, Gregory Schreck, as a VP at a healthcare software company, played a central role in the $1 billion Medicare fraud scheme.

How can patients protect themselves from Medicare fraud?

Patients should verify medical orders and prescriptions, question unsolicited products or services, and report suspicious calls or mailings to Medicare or the HHS-OIG hotline to help prevent exploitation.

Who commits the most healthcare fraud?

Healthcare fraud is most commonly committed by individuals or groups with access to the billing or claims process, including executives, healthcare providers, office managers, and suppliers. Cases often involve coordination between insiders and external parties to submit false claims, as seen in the Gregory Schreck Medicare fraud scheme.

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