Fraud & Abuse Blog

The Department of Justice’s Civil Division announced it is speeding up review of whistleblower complaints under the False Claims Act, specifically for allegations related to federally funded, state-administered benefits programs (e.g., supports for housing, food, and medical care). Previously, such complaints would remain sealed during open-ended investigation, which could last years. DOJ has committed to an initial review and decision within 60–120 days in most cases, meaning more complaints will be unsealed on an expedited basis, allowing more whistleblowers to proceed with litigation and presumably leading to more settlements in the government’s name. While this new procedure will permit more rapid action to address issues raised by whistleblowers, it also risks weakening the government oversight needed to weed out frivolous claims. Given that government investigations of this sort typically take far longer to develop, and especially in light of DOJ’s ongoing staffing shortages, it seems likely that the 120 day cap on investigations will lead to a higher volume of litigation, perhaps involving dubious or unsupported fraud allegations, that imposes significant costs on health care and social service providers. The memo describing the new policy also calls for more targeted requests for information by investigators and strict compliance with timeframes provided by DOJ’s Civil Investigative Demands (CIDs) —this update may weigh in favor of CID recipients quickly challenging overbroad and unduly burdensome demands.

The Department of Justice is adding 15 trial attorneys to the Civil Division’s Health Care Fraud Section to focus specifically on state Medicaid programs. The announcement was included in a press release describing a recent “Minnesota Health Care Fraud Takedown” involving allegations related to autism interventions, home-based therapy, housing stabilization services, and child care. DOJ cited these enforcement actions as evidence of insufficient state-based enforcement, necessitating a “whole-of-government” approach to Medicaid oversight. The press release described a strategy of “surging” prosecutors to various states for similar enforcement actions, including in Arizona, California, New York, Florida, and Texas, and the use of technology tools from the Section’s Data Fusion Center to expedite investigation and prosecution.

The Centers for Medicare & Medicaid Services (CMS) announced a proposed rule on May 20, 2026 aimed at curbing misuse of Medicaid funding by states and redirecting resources toward quality patient care. The rule would cap certain state-directed and targeted payment arrangements that have driven Medicaid reimbursement rates above Medicare levels and allowed states to draw disproportionate federal funds through mechanisms like provider taxes and intergovernmental transfers. CMS estimates the changes could save more than $775 billion over 10 years and are intended to improve fiscal accountability, align payments with Medicare standards, and ensure funds are used to benefit beneficiaries rather than financing schemes that inflate costs without improving outcomes. The public is encouraged to provide comments on the proposed rule, including feedback on implementation, by July 21, 2026. More information can be found here.

The Department of Justice’s National Fraud Enforcement Division announced on April 30, 2026, the creation of a West Coast Health Care Fraud Strike Force, a multi-district initiative combining prosecutors from the Fraud Division’s Health Care Fraud Section with U.S. Attorneys’ Offices in Arizona, Nevada, and the Northern District of California to target a growing wave of health care fraud in the region. The Strike Force will leverage coordinated, data-driven enforcement alongside partners such as the FBI, HHS-OIG, and DEA to investigate and prosecute sophisticated schemes—particularly those involving technology-enabled fraud, billing abuses, and federal health care programs like Medicare and Medicaid.

MassHealth’s recent Nursing Facility Bulletin 200 signals a more aggressive approach to policing staffing levels driven by data mining—and a clearer path from compliance issues to fraud enforcement. The bulletin formalizes a quarterly framework using CMS Payroll-Based Journal (PBJ) data, requiring facilities to maintain an average of at least 3.58 hours per patient day (HPPD), with tiered rate reductions of up to 3% for those that fall below the threshold. Crucially, HPPD is calculated on a quarterly basis from daily staffing and census inputs, consolidating operational data into a single metric that drives both payment adjustments and enforcement exposure. The bulletin also establishes a structured enforcement process, including overpayment notices and a defined dispute window, and confirms that MassHealth may pursue sanctions and refer providers to the Attorney General where it identifies low staffing levels or misleading PBJ reporting—reflecting an ongoing trend of using PBJ data as a trigger for fraud investigations.

On May 18, HHS-OIG posted Advisory Opinion 26-10 (Unfavorable), issued on May 13, addressing an orthopedic device manufacturer’s proposal to pay physician consultants a “royalty” equal to a percentage of net sales across an entire product line in exchange for product-line-level consulting services, including teaching, training, and proctoring. The arrangement featured compliance-oriented guardrails: an evaluation panel to assess consultant performance, minimum-hours requirements, an FMV hourly fallback rate for consultants who did not qualify for royalties, and exclusions for certain sales attributable to the consultant’s own procedures, affiliated facilities, or products already subject to separate royalty agreements. OIG was unpersuaded. According to the OIG, the arrangement failed the personal services safe harbor at 42 C.F.R. § 1001.952(d) because the royalty methodology took into account the volume or value of business generated between the parties. OIG gave particular weight to the requestor’s inability to certify that none of the consulting services would contribute to revenue generation, the fact that a consultant could earn royalties without contributing to the development of any specific product in the line, and the risk that teaching and training duties would motivate consultants to steer other ordering physicians toward the manufacturer’s products. OIG concluded the arrangement presented risks of skewed clinical decision-making, patient steering, unfair competition, inappropriate utilization, increased federal health care program costs, and could amount to a payment-for-referrals scheme. The opinion reinforces that FMV compensation, referral-exclusion carve-outs, and creative compliance structures do not necessarily insulate product-line royalty arrangements from AKS risk when the consultant is positioned to recommend or arrange for downstream purchasing.

On May 20, HHS-OIG posted Advisory Opinion 26-11 (Favorable), issued May 15, a favorable opinion addressing a precision oncology company’s practice of providing consenting patients a free Supplemental Report expressing multi-cancer detection results in connection with an FDA-approved blood-based CRC screening test. The multi-cancer detection algorithm, which holds FDA Breakthrough Device designation, is run on the same blood sample collected for the CRC screening test and screens for 11 cancer types, 6 of which have no USPSTF-recommended screening modality. The algorithm is not yet FDA-approved as a standalone device and is not separately reimbursable. OIG analyzed the arrangement under both the Anti-Kickback Statute and the Beneficiary Inducements CMP, concluding that it generates prohibited remuneration under each, but that the risk of fraud and abuse was sufficiently low that OIG would not impose sanctions. No safe harbor applied, and the Preventive Care Exception was unavailable because neither test is listed in the USPSTF Guide. OIG credited three categories of low risk: (1) the arrangement is unlikely to cause overutilization, because the Supplemental Report requires no additional procedure, the underlying test is reimbursable only once every three years, the MCD Test is not itself reimbursable, and any follow up ; (2) it is unlikely to skew clinical decision-making, because physicians are not compensated for ordering or opting in, there is no targeted or direct-to-consumer marketing of the Supplemental Report, and the company actively monitors and removes third-party social media promotion; and (3) it is unlikely to cause steering or unfair competition, in part because the company’s laboratory is the sole performer of the CRC screening test and 6 of the detected cancers lack any alternative screening option. The arrangement is time-limited, ending upon FDA approval or Medicare coverage of the MCD Test. The opinion offers a compliance framework for diagnostics companies seeking to deliver investigational, non-reimbursable test outputs to patients during the pre-approval period, but its favorable outcome is tightly tethered to the specific requester and facts presented.

On May 13, CMS announced a “nationwide temporary moratorium on enrollment of hospices,” imposing a six-month freeze on new Medicare hospice enrollments effective May 13, 2026. The agency invoked its authority under the Affordable Care Act, which permits temporary enrollment moratoria when CMS determines they are necessary to prevent fraud, waste, or abuse. The moratorium does not apply to enrollment applications submitted to the Medicare Administrative Contractors prior to the date of the moratorium. Like the Medicare DME moratorium described below, CMS did not include Medicaid or CHIP in the hospice enrollment moratorium but encourages states to do so.

On February 25, CMS announced a “nationwide moratorium on Medicare enrollment for certain Durable Medical Equipment, Prosthetics, Orthotics, and Supplies (DMEPOS) suppliers,” temporarily halting new supplier enrollments and certain ownership changes in categories identified as particularly susceptible to fraud. CMS has historically identified DMEPOS as a high-risk area for improper billing, citing more than $1.5 billion in suspected fraudulent billing in this sector in the prior year. The moratorium reflects a deliberate shift away from “pay-and-chase” enforcement toward preemptive controls, allowing CMS to pause market entry to support ongoing investigations and risk mitigation efforts.

In April 2026, the CDC temporarily paused diagnostic testing for more than two dozen infectious diseases—including rabies, poxviruses, certain parasites, and other specialized assays—describing the move as part of a “routine review” to ensure laboratory quality. In response, state and commercial laboratories are stepping in to absorb testing demand, effectively shifting frontline responsibility for disease detection and monitoring away from the federal government and onto a more decentralized network.