On April 7, 2026, Acting Attorney General Todd Blanche issued a memorandum entitled “Creation of the National Fraud Enforcement Division.” The Memorandum states, in part…

The American people deserve a government that stewards their money wisely and protects it from wrongdoers…

The Department has a storied history of combatting fraud and bringing criminal actors to justice. However, the Department has never adopted a comprehensive and coordinated approach to investigating and prosecuting fraud against taxpayer dollars and taxpayer-funded programs.

With over a trillion dollars at stake each year, threatened by increasingly sophisticated and opportunistic fraudsters, the time for that comprehensive and coordinated approach is now. Accordingly, to honor our commitment to the public, the Department has established the National Fraud Enforcement Division.

The core mission of the National Fraud Enforcement Division is to zealously investigate and prosecute those who steal or fraudulently misuse taxpayer dollars. The National Fraud Enforcement Division will fulfill that mission by coordinating with agencies responsible for administering benefit programs; partnering with federal, tribal, state, territorial, and local law enforcement on fraud-fighting efforts; developing systems and processes that ensure efficient identification. The fraud against taxpayer dollars; and equipping prosecutors and law enforcement with state-of-the-art tools and resources needed to bring criminal actors to justice…

The Department will commence this new mission by consolidating and realigning relevant resources into the National Fraud Enforcement Division. This is necessary to avoid duplication, draw clear lines of effort between divisions, minimize layers of bureaucracy, centralize relevant expertise, and, ultimately, maximize results…

To ensure swift movement towards fulfilling the mission of the National Fraud Enforcement Division, I am directing the following actions and establishing the following protocols:

• Effective immediately, the Assistant Attorney General for the National Fraud Enforcement Division shall assume operational control of the Criminal Division’s Tax Section, the Health Care Fraud Unit, and the Market, Government, and Consumer Fraud Unit, and shall establish the priorities and direct the allocation of resources within them…
• Within 30 days of the date of this Memorandum, the Office of Legal Policy, after consultation with the National Fraud Enforcement Division, Criminal Division, Justice Management Division, and any other relevant component, shall recommend to the Deputy Attorney General which criminal prosecutorial resources should be realigned into the National Fraud Enforcement Division…

• The Deputy Attorney General will make a final decision on realignment within three business days after receipt of the Office of Legal Policy’s recommendations.
• Following the Deputy Attorney General’s realignment determination, the Justice Management Division shall facilitate the orderly transfer of identified personnel into the National Fraud Enforcement Division, to be completed no more than 90 days following such determination…
• Within 45 days of the realignment determination, the Office of Legal Policy shall review the Justice Manual, relevant Department guidance, regulations, and memoranda to determine whether updates or edits are required or prudent due to the creation of the National Fraud Enforcement Division…
• Within 21 days of the date of this Memorandum, each U.S. Attorney’s Office shall designate an experienced prosecutor to be detailed-in-place to the National Fraud Enforcement Division…
• Within 14 days of the date of this Memorandum, the Criminal Division and the Executive Office for United States Attorneys shall provide a report to the National Fraud Enforcement Division that (1) identifies all ongoing investigations into fraud perpetrated against taxpayer-funded programs that have been referred to Department of Justice prosecutors; and (2) lists significant events, such as a complaint or indictment, guilty plea, trial, or sentencing, expected to occur within the next 90 days in investigations into fraud perpetrated against taxpayer-funded programs.
• The Department’s grant-making components, in coordination with the National Fraud Enforcement Division, the Justice Management Division, and the Executive Office for United States Attorneys, shall, as appropriate and consistent with applicable law, establish a grant program, or refocus existing grant programs, to enable state and local prosecutors to join the mission of the National Fraud Enforcement Division as Special Attorneys or Special Assistant U.S. Attorneys.
• The National Fraud Enforcement Division, in coordination with the Justice Management Division, shall design and implement a hiring plan that enables the Department to rapidly and substantially increase prosecutorial resources across the country to combat fraud against taxpayer-funded programs…
• The National Fraud Enforcement Division shall coordinate with the Justice Management Division and other relevant components, law enforcement agencies, agency inspectors general, and members of the Task Force created by Executive Order 14395, titled “Establishing the Task Force to Eliminate Fraud,” to establish and support a National Fraud Detection Center dedicated to identifying fraud across taxpayer-funded programs and generating leads for investigators and prosecutors.
• The Civil Division shall designate a National Fraud Enforcement Division liaison to ensure that the Department leverages the full range of enforcement tools-civil and criminal-to combat fraud against taxpayer dollars.
• The Federal Bureau of Investigation shall coordinate with the National Fraud Enforcement Division and any relevant law enforcement agencies, particularly agency inspectors general, to ensure sufficient resources are allocated to investigating fraud against taxpayer-funded programs. Additionally, the Federal Bureau of Investigation shall coordinate with the Justice Management Division to increase the number of agents, analysts, and forensic accountants available to investigate fraud against taxpayer-funded programs
• Until further notice, the Criminal Division’s Appellate Section; Money Laundering, Narcotics and Forfeiture Section; and filter teams shall be responsible for supporting, advising, and litigating on behalf of National Fraud Enforcement Division, consistent with the support these units and teams provide the Criminal Division.
• Within 90 days of the date of this Memorandum, the Office of Legal Policy shall review relevant laws, regulations, and guidelines bearing on fraud investigations, prosecutions, and penalties, and provide recommendations to the Deputy Attorney General for strengthening such laws, regulations, and guidelines.
• Within 120 days of the date of this Memorandum, the Office of Legal Policy shall provide a recommendation to the Deputy Attorney General on whether non-criminal elements of the Department should be brought within the National Fraud Enforcement Division.

There are a number of “takeaways” for DME suppliers:
• It is common for a DME supplier to be in a constant growth mode: adding (i) patients, (ii) employees to serve the patients, (iii) product lines and services, and (iv) third-party payors (“TPPs”). The risk with being in a perpetual growth mode is that the supplier can outstrip its compliance infrastructure. It is critical for the DME supplier to invest the time and money into its compliance protocols so that the protocols can keep pace with the supplier’s evolving operations. On multiple occasions, I have witnessed a supplier that is about to sell. The supplier shows impressive growth and EBITDA (earnings before interest, taxes, depreciation and amortization). But when the buyer digs into due diligence, it finds that the selling DME supplier has compliance problems. Invariably, this results in either a reduction in the purchase price or the buyer walking away.

There are multiple ways a noncompliant DME supplier can “get caught,” including the following:

• As indicated by the Memorandum, the federal government is increasing its enforcement activities against health care providers.
• Traditional Medicare and traditional state Medicaid programs are becoming more sophisticated in spotting aberrations in billing patterns. The programs have algorithms in place that are geared towards flagging such aberrations. Such algorithms are buttressed by AI.
• To a lesser extent, Medicare Advantage Plans and Medicaid Managed Care Plans are also becoming more sophisticated in spotting aberrations in billing patterns.
• And then there are current or former employees who become “whistleblowers.” The employee (the “relator” or “whistleblower”) gathers information regarding the DME supplier’s noncompliant activities. The relator hires an attorney who specializes in filing whistleblower lawsuits. The attorney files a lawsuit in federal court showing the plaintiffs to be the relator and the United States. The lawsuit is placed “under seal,” meaning that no one other than the Department of Justice (“DOJ”) and the relator know about it. A civil Assistant U.S. Attorney (“AUSA”) supervises a team of investigators to determine if the lawsuit has merit. If the AUSA determines that the lawsuit has merit, the lawsuit will be unsealed, it will be served on the DME supplier, and the DOJ will “intervene”…meaning that the DOJ will take the lawsuit over (i.e., the relator’s attorney can sit on the sidelines). If there is an ultimate recovery (e.g., the DME supplier and the DOJ reach a settlement), the relator receives about 20% of the proceeds. If the civil AUSA determines that the DME supplier’s actions are particularly egregious, he/she will hand the file over to a criminal AUSA who will determine if a criminal case should ensue. Most criminal cases arise out of whistleblower lawsuits.A robust compliance program can greatly reduce the risk of a DME supplier finding itself in the government’s crosshairs. Such a compliance program should resemble the following:
• The supplier should prepare a compliance document that is customized for that particular supplier. The supplier should avoid simply purchasing an off-the-shelf compliance program and putting it on the shelf. A health care attorney and/or a qualified consultant can assist the DME supplier in preparing the compliance document.
• A Compliance Officer (“CO”) should be hired. If the DME supplier is large, the CO should be full time. If the supplier is small, the CO can wear a couple of different hats.
• A toll-free anonymous hotline should be installed that will allow employees to reach out to the CO with compliance concerns.
• A Compliance Committee (“CC”) should be established. The CC should meet (i) on a regular basis and (ii) when needed.
• Employees should receive regular training on compliance issues.
• The DME supplier should conduct billing self-audits, the goal being to discover potential billing problems.
• If it can afford to do so, the supplier should hire an outside consultant to conduct billing self-audits on a periodic basis.
• While the DME supplier’s local business attorney can handle non-healthcare specific issues for the supplier, the supplier should also have an experienced health care attorney on retainer to advise the supplier on health care regulatory issues.

There is an old saying: “You cannot hide the truth. The truth always bubbles to the surface.” It is important for the DME supplier to stay ahead of potential compliance problems by constantly investing into its compliance infrastructure.

Jeffrey S. Baird, JD, 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].