AMARILLO, TX – The Department of Justice (DOJ) and the Department of Health and Human Services (HHS) announced the formation of the False Claims Act Working Group in July 2024, which laid the groundwork for the 2025 National Health Care Fraud Takedown (Takedown). The Working Group reshaped enforcement strategies by introducing a more aggressive, data driven, and coordinated approach to combating healthcare fraud.

The DOJ recently announced the results of the Working Group in a June 30, 2025 Press Release.

The Takedown resulted in criminal charges against 324 defendants, including physicians, nurse practitioners, pharmacists, and other licensed medical professionals, for their alleged participation in various healthcare fraud schemes involving $14.6 billion in intended losses.

The DOJ seized assets valued at over $245 million, including cash, vehicles and cryptocurrency. According to HHS, CMS actions prevented $4 billion in fraudulent payments. CMS actions also suspended or revoked the billing privileges of 205 providers.

The Takedown involved defendants who worked in transnational criminal organizations allegedly involved in submitting over $12 billion in fraudulent claims to insurance companies.

These organizations utilized a network of fake foreign owners who assumed the identities of individuals from overseas and acquired dozens of DME companies located across the United States. They submitted $10.6 billion in fraudulent health care claims to Medicare for urinary catheters. These individuals exploited the stolen identities of over one million Americans and used the confidential medical information to submit the fraudulent claims.

The organization then exploited the United States’ financial system by laundering the fraudulent proceeds and employed a range of tactics to circumvent anti-money laundering controls, including transferring the funds into cryptocurrency and shell companies located abroad.  A banker was arrested for allegedly facilitating the money laundering of the fraudulent proceeds through a bank based in the United States.

CMS successfully prevented these organizations from receiving all but $41 million of the $4.45 billion that was scheduled to be paid by Medicare.

Another action involving a foreign influence, a fraudulent scheme, involved the use of artificial intelligence (AI). In this instance, the defendants allegedly used AI to create fake recordings of Medicare beneficiaries consenting to receive certain products. The beneficiaries’ confidential information was then illegally sold to laboratories and DME suppliers, which used the fraudulently generated data to submit fraudulent claims for products and services the beneficiaries did not request, need, or receive.

Telemedicine was also used to defraud the Medicare system. Defendants targeted Medicare beneficiaries through deceptive telemarketing campaigns and then fraudulent claims were submitted to Medicare for DME for those beneficiaries.  The DOJ states that it continues to focus on eliminating health care fraud schemes that depend on telemedicine.

A DOJ-HHS Task Force will involve the DOJ coordinating with various government agencies to crack down on healthcare fraud using the False Claims Act. The Task Force targets six priority enforcement areas, including Medicare Advantage fraud, kickbacks, price manipulation, and EHR abuse, and brings together senior leadership from HHS-OIG, CMS, and the DOJ’s Civil Division to accelerate investigations and initiate payment suspensions.

The Task Force also encourages whistleblower reports and voluntary disclosures by healthcare companies, using data mining and audit findings to proactively identify fraudulent activity that threatens the integrity of the federal healthcare system.

Lessons for DME suppliers

• Be Wary of Sham Telehealth Companies – There are certainly legitimate telehealth companies. These are companies that (i) are paid by patients and/or their insurers, (ii) have contracted with physicians, (iii) require their physicians to be licensed in the appropriate states, and (iv) ensure that the telehealth encounters with patients comply with applicable federal and state laws. Conversely, there are sham telehealth companies that work with lead generation companies (“LGCs”). In this arrangement, (i) the LGC generates leads from patients who are interested in a certain DME item, (ii) the LGC forwards the leads to the telehealth company, (iii) the telehealth company provides patient information to the physician, (iv) the physician either has a two minute call with the patient, or does not talk to the patient, but instead, reviews a document provided by the telehealth company on the patient, (v) the physician writes the order and transmits it to the telehealth company, and (vi) the telehealth company sends the order to the DME supplier. The money flows like this: (i) the DME supplier pays the LGC, (ii) the LGC pays the telehealth company, and (iii) the telehealth company pays the physician. This means that the DME supplier is paying the physician. The money “flows through” the LGC and the telehealth company, each of which retains its share. This scenario is a kickback…and results in the submission of false claims by the DME supplier (i.e., a claim that arises from a kickback arrangement is a “false claim”).
• Be Wary of an LGC that Offers to Furnish Signed Physician Orders to the DME Supplier – See the above discussion. There is a risk that the signed order results from a kickback scheme. When an LGC promises to deliver orders for payment, it is often too good to be true. The supplier will likely find that the source of payment to the telehealth physician is the supplier itself.
• In Fact, Be Wary of LGCs – LGCs have nothing to lose. They do not have PTANs. They are not accredited. They have not certified that they will comply with the Medicare supplier standards. When the DOJ investigates an arrangement, the LGC can just “fade into the background” and seek its next scam. On the other hand, the DME supplier has everything to lose. It is the one that (i) is accredited, (ii) has state DME licensure, (iii) has a surety bond, (iv) has a PTAN, (v) has a state Medicaid provider number, and (vi) has third-party payor (“TPP”) contracts. All of this can disappear if the DME supplier is investigated (and if the investigation goes badly for the supplier).
• Confirm that Patient/Physician Encounter is Legitimate – Ideally, the patient will have an in-person encounter with his/her physician and have a physical examination. If the patient is to have a telehealth encounter with the ordering physician, the DME supplier needs to confirm that the encounter complied with federal and state laws governing telehealth encounters.

By incorporating these lessons, DME suppliers can avoid problematic arrangements and ensure compliance with legal requirements.

Jeffrey S. Baird, Esq. is chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national healthcare practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization and can be reached at (806) 345-6320 or [email protected].

Jacque K. Steelman, Esq. is a member of the Health Care Group at Brown & Fortunato, PC, a law firm with a national healthcare practice based in Texas. She represents pharmacies, infusion companies, HME companies, manufacturers, and other healthcare providers throughout the United States. Steelman can be reached at (972) 684-5789 or [email protected].