The Justice Department has announced a massive fraud bust targeting American government healthcare programs, amounting to $6.5 billion in stolen funds from Medicaid and Medicare.
According to an announcement by acting U.S. Attorney General Todd Blanche, 455 individuals across 45 U.S. states and territories have been charged with healthcare fraud. Blanche stated: “This is just the beginning. Fraudsters can no longer rip off American taxpayers. If you seek to harm or cheat Americans, we will find you, seize any assets, and prosecute you to the fullest extent of the law.”
Blanche described the operation as “the greatest combined federal and state effort in combating healthcare fraud in history.” Health and Human Services Secretary Robert F. Kennedy, Jr., who attended the press conference, called it “the second largest amount ever charged in a single healthcare fraud operation” and the “largest Medicaid fraud enforcement action.”
Kennedy emphasized that these schemes targeted American taxpayers rather than government programs: “Every fraudulent dollar diverted into a criminal scheme is a dollar unavailable for patient care.” The crackdown involved nine healthcare-fraud strike forces, 57 U.S. attorneys’ offices, 41 state attorneys general, and multiple law enforcement agencies. Kennedy noted eighteen of the participating states had Democratic governors.
Kennedy detailed examples of fraudulent schemes: some criminals ordered unnecessary tests, prescribed unnecessary products, and even created opioid addictions to boost revenue. In some cases, patients died while under the impression they were receiving care from providers who “only viewed them as billing opportunities.”
In one instance, the DOJ indicted an Arizona corporate executive for over $1 billion in fraud related to unnecessary wound grafts. Blanche stated that this scheme cost Medicare more than $1 million per patient. The indictment is linked to a larger network involving 11 individuals accused of perpetrating more than $2 billion in fraudulent wound-care schemes. These perpetrators used stolen funds to purchase multi-million dollar homes, $800,000 Maseratis, jewelry worth hundreds of thousands of dollars, and even constructed a $4.6 million hotel in the Philippines.
Blanche noted that the DOJ has seized over $182 million in cash and assets. Additionally, Blanche announced the creation of the West Coast Strike Force to combat Medicaid fraud, which charged 295 individuals for alleged fraud totaling $518 million.
Kennedy described a Los Angeles-area hospice owner and two marketers who allegedly carried out a $27.7 million Medicare fraud scheme. The indictment revealed that the owner paid illegal kickbacks to obtain personal information of deceased Medicare beneficiaries. Kennedy stated: “One of the ways we’ve been able to detect that fraud is that, in many of them, the patients never die. They live forever. That’s not supposed to happen in hospices.”
Kennedy also explained that during the Biden administration, his predecessor implemented a policy known as the “pay and chase” system at HHS. This system allowed payments to be made without stopping fraudulent claims, with the expectation of clawing back funds later. Kennedy noted that when he questioned HHS officials about this approach, they stated they were instructed to prioritize enrollment over fraud detection.
Dr. Robert Malone, former vice chair of the CDC’s Advisory Committee on Immunization Practices (ACIP), seconded Kennedy’s assertion that retrospective clawbacks have never been effective. Malone wrote: “For most of Medicare’s history, fraud investigations were largely retrospective. Claims were submitted, payments were made, and investigators attempted to identify fraudulent activity months or years later. By the time a scheme was uncovered, much of the money was often gone… Recovering those funds was difficult, and in many cases impossible.”
Kennedy announced that HHS is replacing “pay and chase” with a “detect and prevent” system using advanced artificial intelligence and data analytics to identify fraud before payments are made. He stated: “Our objective is straightforward: stop the fraud before it even happens.” Kennedy warned: “Anyone who exploits patients or steals Medicaid or Medicare dollars will face justice.”
In his Substack, Malone noted that criminals would adapt by employing similar technologies for fraud: “CMS has increasingly invested in advanced analytics… And so, not surprisingly, the bad guys are also employing the same data analytics and AI toolkit to identify and exploit systemic reimbursement weaknesses.”
The article concludes with the observation that such fraud has long been a problem. As Kennedy noted, this bust is “just the latest reminder of the wisdom of our Constitution and folly of the current system that regularly disregards it.” The text states: “HHS is one of many federal agencies the Founders never intended the United States to create. The U.S. Constitution does not permit government healthcare.”
Paul Dragu is an award-winning reporter and host of a daily news program, author of Defector: A True Story of Tyranny, Liberty and Purpose.
