On October 22, 2026, the U.S. Department of Justice (DOJ) announced charges against 15 defendants, including six medical professionals, involving more than $1.8 billion in allegedly fraudulent healthcare claims. The cases span addiction treatment, arterial procedures, hospice care, genetic testing, Medi-Cal pharmacy claims, and prescription drug sales. DOJ characterized the addiction treatment case as the largest of its kind DOJ has prosecuted.
The indictments are the latest example of the enforcement activity of DOJ’s National Fraud Enforcement Division and its focus on healthcare fraud. They extend beyond allegedly false billing to questions of medical necessity, patient recruitment, hospice eligibility, and allegedly unlawful referral payments. They also suggest that the Fraud Division is increasingly relying on data analytics to bolster investigations.
Alleged $1.6 Billion Substance Abuse Treatment Scheme
The largest case involves two treatment company operators and two patient recruiters. According to DOJ’s announcement, the four allegedly arranged to bring vulnerable individuals from across the country to purported addiction treatment facilities in Southern California and elsewhere, generating claims exceeding $1.6 billion to private insurers.
DOJ alleges that the two operators controlled dozens of treatment companies and directed recruiters, including the other two defendants, to target people experiencing homelessness or poverty and those attending recovery support groups. According to the announcement, the defendants sought prospective patients with high-reimbursing insurance policies and sometimes enrolled them in policies for which they were ineligible.
The alleged inducements included travel, housing, cash, gift cards, and illegal drugs. DOJ alleges that accommodations depended on insurance reimbursement: some patients with more-favorable policies received hotel rooms or private apartments, while others eligible for lower reimbursement lived in crowded, unsanitary housing.
DOJ also alleges that the operators repeatedly moved patients through their facilities to sustain insurance billing, even when care was unnecessary or not provided. The announcement describes efforts to prevent patients from leaving, including withholding belongings, restricting family contact, physically blocking exits, and administering medication.
According to DOJ, the purported therapy included videoconference sessions with more than 100 attendees who needed only to turn on their cameras. Messages reproduced in the announcement allegedly instructed a prospective patient to check in briefly and then spend the day at the beach while insurers were billed for therapy.
The four defendants are charged with healthcare fraud, violations of the Eliminating Kickbacks in Recovery Act (EKRA), and conspiracies involving healthcare fraud, wire fraud, and EKRA. The two treatment company operators face additional counts of healthcare fraud and EKRA violations.
Allegedly Unnecessary Arterial Procedures and the Role of Data Analytics
A cardiothoracic surgeon and his business partner, a chiropractor, were charged in an alleged $135 million Medicare scheme involving unnecessary atherectomies. As described in DOJ’s announcement, an atherectomy uses a bladed catheter to remove arterial plaque.
According to DOJ’s summary of the indictment, the chiropractor posed as a physician, diagnosed arterial disease, and recommended atherectomies. The surgeon allegedly performed procedures on patients without arterial disease and repeated procedures after earlier attempts had failed. DOJ reported that some patients experienced severe pain and discomfort.
DOJ says data analytics identified the case by showing that the surgeon’s atherectomy billing was unusually high compared with other U.S. providers. The announcement includes a chart comparing his Medicare billing with national peers from 2016 through 2023.
DOJ alleges that the defendants concealed the volume of procedures by billing under other providers’ names. They also allegedly offered patients transportation, groceries, household goods, gift cards, and utility payments to encourage clinic visits.
The case illustrates how data analytics and comparisons across providers can generate investigative leads, even before investigators examine individual claims.
Hospice, Kickback, and Medi-Cal Fraud Allegations
The announcement also describes three alleged hospice schemes involving billings exceeding $138 million. DOJ alleges that beneficiaries who were not terminally ill were enrolled in hospice and that Medicare was billed for unnecessary or unprovided care.
One defendant allegedly operated a scheme through a hospice company. DOJ alleges that the operator and marketers recruited seniors at community centers with offers of free care and, in some cases, kickbacks. The operator allegedly described the care as “palliative services” rather than hospice; some beneficiaries reportedly learned of their enrollment only after Medicare or their primary care providers contacted them. According to DOJ, the hospice’s discharge rate for reasons other than death was about 85%, exceeding four times the national average.
Other hospice charges involve a physician who allegedly certified beneficiaries as terminally ill despite their ineligibility and an operator who allegedly worked through four hospice providers. DOJ alleges that the operator used nominal owners, false physician certifications, and referral payments to recruit patients, with marketers receiving approximately $1,500 to $1,800 per referral.
Separate charges concern genetic testing and treatment referrals. According to DOJ, two physicians allegedly received payments for each patient whose unnecessary genetic tests they authorized. Another individual was charged separately with receiving kickbacks for treatment referrals. DOJ reported payments of $150,000 to $250,000 concealed through a purported marketing agreement.
Another defendant faces charges in an alleged Medi-Cal pharmacy scheme. According to DOJ, the defendant and others exploited a temporary pause in prior authorization requirements to bill for unnecessary generic medications with high reimbursement rates through a pharmacy. DOJ alleges that the scheme generated approximately $269 million in false claims, of which Medi-Cal paid approximately $179 million.
Practical Takeaways
These cases are the latest example of the Fraud Division’s enforcement activity nationwide and its focus on healthcare fraud as a strategic priority. In addition to signaling the Fraud Division’s increasing reliance on data analytics as an investigative tool, the cases raise several areas that healthcare providers and organizations may choose to evaluate to bolster their compliance programs:
- Providers and clinical leaders may wish to evaluate whether records support medical necessity, patient eligibility, physician certifications, and the specific care billed, rather than focusing solely on whether a service occurred.
- Billing and compliance teams may benefit from comparing utilization and reimbursement patterns with those of similar providers and reviewing unexplained deviations.
- Treatment facilities, hospice providers, and laboratories may wish to review marketer compensation, referral relationships, and patient incentives, including housing, transportation, and other benefits.
- Pharmacies and prescribing professionals may wish to assess whether prescribing records and claims reviews substantiate medical necessity, including when payer authorization requirements change.
If you have questions about what these enforcement actions might mean to you, contact Abraham Souza or Gohar Tahmizian.
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