The United States Department of Justice (DOJ) cracked down on a series of sprawling fraudulent schemes in the health care industry. It filed charges against a total of 193 individuals in 32 different federal districts for their involvement in these activities, causing losses of approximately $2.75 billion to both insurance companies and public assistance programs.
The initiative, named the 2024 National Health Care Fraud Enforcement Action is one of the largest coordinated efforts from law enforcement agencies to date and should effectively dismantle huge networks of practitioners, doctors, and other licensed medical professionals who have participated in practices that are considered fraudulent in the eye of the law.
Six Different Cases Add Up to $2.75 Billion in Intended Losses
According to Attorney General Merrick B. Garland, the charges involve a wide range of fraudulent activities committed by these individuals, including:
- A $900 million fraud scheme involving amniotic wound grafts.
- The unlawful distribution of millions of Adderall and other stimulant pills.
- Over $90 million in fraud related to adulterated and misbranded HIV medication.
- More than $146 million in fraudulent addiction treatment schemes.
- Over $1.1 billion in telemedicine and laboratory fraud.
- Over $450 million in other health care fraud and opioid schemes.
In total, the Justice Department calculates that these schemes resulted in approximately $2.75 billion in intended losses and $1.6 billion in actual losses to government healthcare programs and private insurers.
“Health care fraud affects every American,” commented Principal Deputy Assistant Attorney General Nicole M. Argentieri. “It siphons off hard-earned tax dollars meant to provide care for the vulnerable and disabled. In doing so, it also raises the cost of care for all patients. Even worse, as the prosecutions we announce today underscore, health care fraud can harm patients and fuel addiction.”
Among the 193 defendants, there are 76 doctors, nurse practitioners, and other licensed professionals. Some of the most significant cases highlighted by the Justice Department include:
Amniotic Wound Graft Scheme
Four individuals in the District of Arizona were accused of defrauding the system by filing $900 million in false or fraudulent claims involving amniotic wound grafts. The scheme targeted elderly and terminally ill patients who received – in some cases – unnecessary grafts.
In less than 2 years, two of the individuals who are being charged in this scheme received over $600 million from Medicare. They owned a company in Arizona that bought the supplies and received kickbacks exceeding $330 million for these activities.
Adderall Distribution Case
A company named Done Global Inc. is being accused of illegally distributing millions of Adderall pills. The CEO of the company was charged earlier this month as well for distributing these pills online via an “auto-refill” policy that demanded no follow-ups on the patient (which is blatantly illegal for Adderall, a Schedule-II drug).
The case also included a single nurse who prescribed 1.5 million pills to patients with which the medical professional had no interaction. Patients who received these laws without medical supervision frequently suffered from drug addiction and were not adequately vetted. Various overdose deaths occurred as a result of this scheme.
HIV Medication Fraud
Wire fraud conspiracy charges were brought up against the owners of a wholesale pharmaceutical distribution company that allegedly sold HIV drugs that were either adulterated or misbranded.
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The total proceeds these individuals earned as a result of the scheme ascended to over $90 million. They often exploited vulnerable patients by buying back their medicine to then resell the treatments to pharmacies by forging the documentation.
Patients reportedly received bottles that were labeled as their prescribed medication but contained entirely different drugs. This negligent behavior caused them harmful medical developments.
Addiction Treatment Fraud
Another four defendants were charged with defrauding the Arizona Medicaid system by falsely claiming to provide addiction treatment services to homeless individuals and people living in Native American reservations.
They were able to recruit these patients and obtain their signatures due to their poor living conditions and mental health. However, the services the individuals claimed to have performed were never carried out or they were poorly administered compared to industry standards. The individuals charged in this scheme reportedly used the proceeds – which totaled around $146 million – to finance their lavish lifestyles and the purchase of luxury goods.
Telemedicine and Laboratory Fraud
A total of 36 individuals were charged for submitting fraudulent claims of over $1.1 billion for telemedicine sales and laboratory exams that were either unnecessary or never performed on patients who were referred by practitioners who were paid kickbacks to deliver this information.
Some of the consultations billed to Medicare via this scheme lasted less than 30 seconds and were performed by practitioners in various districts in Texas and New Jersey.
Multiple Agencies Collaborate to Charge Fraudsters, Perform Arrests, and Seize Assets
Several law enforcement agencies including Homeland Security Investigations (HSI) and the Drug Enforcement Administration (DEA) participated in the proceeding and performed the necessary arrests and executed search warrants.
They managed to seize over $231 million in cash, vehicles, gold, and other similar assets along with $80 million from the individuals involved in the amniotic wound graft scheme.
“The extraordinary Special Agents of Homeland Security Investigations (HSI) were proud to play an integral role in this multi-agency investigation and national takedown of healthcare fraud,” said Secretary of Homeland Security Alejandro N. Mayorkas.
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“Through this action, we in federal law enforcement send a clear and strong message—that we will hold accountable those health care providers and prescribers who prey on their patients for profit and disregard the first rule of medical care: do no harm.”
“The Justice Department will bring to justice criminals who defraud Americans, steal from taxpayer-funded programs, and put people in danger for the sake of profits,” commented Attorney General Merrick B. Garland.
This huge case also involved the cooperation of 32 U.S. Attorneys’ Offices from multiple districts across the nation and 11 State Attorney General’s Offices.
Law Enforcement Agencies Keep Working Hard to Protect the Healthcare System
The charges brought by the Justice Department have far-reaching consequences to both the alleged perpetrators, the health care system, and taxpayers as the actions of law enforcement agencies could effectively recoup millions of dollars in ill-gotten funds.
“Healthcare fraud victimizes patients, endangers the health of vulnerable people, and plunders healthcare programs,” said FBI Director Christopher Wray. “This wide-ranging collaboration demonstrates the FBI’s commitment to rooting out predatory healthcare fraud, protecting patients, and ensuring critical healthcare funds go where they are needed most.”
HHS Deputy Secretary Andrea Palm emphasized the importance of protecting the integrity of health care programs: “Those who steal from these programs are stealing from the American families who rely on them and putting patients at risk. We won’t stop until all those who try to defraud the federal government are caught and held accountable.”
Vulnerable populations were commonly targeted by the practitioners and companies that were charged. Some examples include elderly patients, homeless individuals, and people with terminal conditions whose judgment is clouded or distorted by their living and health situations.
These individuals were taken advantage of to obtain their signatures to claim money for treatments that were not performed or just partially administered. In many cases, the proceedings were unnecessary and they sometimes directly harmed the victim.
Since 2027, the Health Fraud Strike Force has charged over 5,400 individuals for being involved in fraudulent schemes that reportedly siphoned more than $27 billion from public health programs and insurance companies.
In addition to these criminal charges, the Center for Program Integrity of the Centers for Medicare and Medicaid Services (CPI/CMS) said that they took administrative actions against 127 medical providers as well in the past six months for their involvement in fraudulent health care schemes.
“Every dollar saved by investigating fraud is critical to the sustainability of the Medicare program and the needs of the people who depend on it,” said Administrator Chiquita Brooks-LaSure of CMS.
DOJ Set to Crush Health Care Fraud
The 2024 National Health Care Fraud Enforcement Action is another important initiative that aims to crack down on fraud in the health care industry. The scope and reach of these actions will probably deter practitioners from engaging in these illegal practices that drain financial resources from public and private health care assistance programs and jeopardize their integrity.
The scale of the fraud uncovered by the coordinated efforts of multiple branches and institutions under the DOJ umbrella showcases the severity of the issues with the combined intended losses generated by these schemes reportedly nearing $3 billion.
The collaboration between multiple federal agencies, state law enforcement bodies, and local partners demonstrates the commitment of authorities to combat these crimes that hurt the healthcare system.