AMARILLO, TX – DME suppliers live in a glass house. Suppliers are subject to scrutiny by the Centers for Medicare and Medicaid Services (“CMS”), CMS contractors (e.g., DME MACs, RACs and UPICs), the Department of Justice (“DOJ”), Office of Inspector General (“OIG”), and third-party payors (“TPPs”).

Equally as important, DME suppliers are subject to scrutiny by their employees. Virtually all employees are aware of the existence of whistleblower (qui tam) lawsuits. If an employee becomes aware of fraudulent activity, the employee can hire an attorney who specializes in filing whistleblower lawsuits. The attorney will file a federal lawsuit against the DME supplier in the name of the employee and “in the name of the United States.” The lawsuit will initially “go under seal,” meaning that nobody knows about the lawsuit except for the DOJ.

A civil Assistant U.S. Attorney (“AUSA”) will review the lawsuit and will likely oversee an investigation of the DME supplier by the FBI, OIG, and IRS. If the AUSA determines that the whistleblower lawsuit has merit, the DOJ will likely take the lawsuit over from the employee’s attorney. The lawsuit will be unsealed and the DME supplier will find out about the lawsuit. Most whistleblower lawsuits are settled. Upon settlement, the whistleblower (employee) will receive 15% to 20% of the settlement amount.

If the civil AUSA feels that the DME supplier’s actions are particularly egregious, he/she will hand the file to a criminal AUSA who will determine whether to bring criminal charges against the DME supplier and/or its owners and officers. In fact, most criminal cases brought by the DOJ grow out of whistleblower lawsuits.

Separate and apart from whistleblower lawsuits, federal government enforcement agencies (on their own initiative) are becoming increasingly aggressive in pursuing fraud. We witnessed this years ago with Operation Wheeler Dealer…and more recently with Operation Brace Yourself. Now, multiple enforcement agencies are working together to implement Operation Gold Rush.

A June 30, 2025 Department of Justice (“DOJ”) press release states in part:

The Justice Department today announced the results of its 2025 National Health Care Fraud Takedown, which resulted in criminal charges against 324 defendants, including 96 doctors, nurse practitioners, pharmacists, and other licensed medical professionals, in 50 federal districts and 12 State Attorneys General’s Offices across the United States, for their alleged participation in various health care fraud schemes involving over $14.6 billion in intended loss.

[The] government seized over $245 million in cash, luxury vehicles, cryptocurrency, and other assets as part of the coordinated enforcement efforts. As part of the whole-of-government approach to combating health care fraud announced today, the Centers for Medicare and Medicaid Services (CMS) also announced that it successfully prevented over $4 billion from being paid in response to false and fraudulent claims and that it suspended or revoked the billing privileges of 205 providers in the months leading up to the Takedown. Civil charges against 20 defendants for $14.2 million in alleged fraud, as well as civil settlements with 106 defendants totaling $34.3 million, were also announced as part of the Takedown.

“This record-setting Health Care Fraud Takedown delivers justice to criminal actors who prey upon our most vulnerable citizens and steal from hardworking American taxpayers,” said Attorney General Pamela Bondi. “Make no mistake – this administration will not tolerate criminals who line their pockets with taxpayer dollars while endangering the health and safety of our communities.”

“Health care fraud drains critical resources from programs intended to help people who truly need medical care,” said FBI Director Kash Patel. “Today’s announcement demonstrates our commitment to pursuing those who exploit the system for personal gain. With more than $13 billion in fraud uncovered, this is the largest takedown for this initiative to date. Together, the FBI and our law enforcement partners will continue to hold those accountable who steal from the American people and undermine our health care systems.”

Transnational Criminal Organizations
29 defendants were charged for their roles in transnational criminal organizations alleged to have submitted over $12 billion in fraudulent claims to America’s health insurance programs.

For instance, a nationwide investigation known as Operation Gold Rush resulted in the largest loss amount ever charged in a health care fraud case brought by the Department. These charges were announced in the Eastern District of New York, the Northern District of Illinois, the Central District of California, the Middle District of Florida, and the District of New Jersey against 19 defendants. Twelve of these defendants have been arrested, including four defendants who were apprehended in Estonia as a result of international cooperation with Estonian law enforcement and seven defendants who were arrested at U.S. airports and the U.S. border with Mexico, cutting off their intended escape routes as they attempted to avoid capture.

The organization allegedly used a network of foreign straw owners, including individuals sent into the United States from abroad, who, acting at the direction of others using encrypted messaging and assumed identities from overseas, strategically bought dozens of medical supply companies located across the United States. They then rapidly submitted $10.6 billion in fraudulent health care claims to Medicare for urinary catheters and other durable medical equipment by exploiting the stolen identities of over one million Americans spanning all 50 states and using their confidential medical information to submit the fraudulent claims. As alleged, the organization exploited the U.S. financial system by laundering the fraudulent proceeds and deploying a range of tactics to circumvent anti-money laundering controls to transfer funds into cryptocurrency and shell companies located abroad. The arrests announced today also include a banker who facilitated the money laundering of fraud proceeds on behalf of the organization through a U.S.-based bank.

The Health Care Fraud Unit’s Data Analytics Team and its partners detected the anomalous billing through proactive data analytics, and HHS-OIG and CMS successfully prevented the organization from receiving all but approximately $41 million of the approximately $4.45 billion that was scheduled to be paid by Medicare. HHS and CMS intend to seek to return the $4.41 billion in escrow to the Medicare trust fund for needed medical care. The scheme nonetheless resulted in payments of approximately $900 million from Medicare supplemental insurers. To date, law enforcement has seized approximately $27.7 million in fraud proceeds as part of Operation Gold Rush.

In another action involving foreign influence, charges were filed in the Northern District of Illinois against five defendants, including two owners and executives of Pakistani marketing organizations, in connection with a $703 million scheme in which Medicare beneficiaries’ identification numbers and other confidential health information were allegedly obtained through theft and deceptive marketing. The defendants allegedly used artificial intelligence to create fake recordings of Medicare beneficiaries purportedly consenting to receive certain products. According to court documents, the beneficiaries’ confidential information was then illegally sold to laboratories and durable medical equipment companies, which used this unlawfully obtained and fraudulently generated data to submit false claims to Medicare. Certain defendants controlled dozens of nominee-owned durable medical equipment companies and laboratories that allegedly submitted fraudulent claims for products and services the beneficiaries did not request, need, or receive. Certain defendants also allegedly conspired to conceal and launder the fraud proceeds from bank accounts they controlled in the United States to bank accounts overseas. In total, the defendants caused approximately $703 million in alleged fraudulent claims to Medicare and Medicare Advantage plans, which paid approximately $418 million on those claims. The government seized approximately $44.7 million from various bank accounts related to this case.

Fraudulent Wound Care
Charges were filed in the District of Arizona and the District of Nevada against seven defendants, including five medical professionals, in connection with approximately $1.1 billion in fraudulent claims to Medicare and other health care benefit programs for amniotic wound allografts. As alleged, certain defendants targeted vulnerable elderly patients, many of whom were receiving hospice care, and applied medically unnecessary amniotic allografts to these patients’ wounds. Many of the allografts allegedly were applied without coordination with the patients’ treating physicians, without proper treatment for infection, to superficial wounds that did not need this treatment, and to areas that far exceeded the size of the wound. Certain defendants allegedly received millions in illegal kickbacks from the fraudulent billing scheme.

Telemedicine and Genetic Testing Fraud
In today’s Takedown, 49 defendants were charged in connection with the submission of over $1.17 billion in allegedly fraudulent claims to Medicare resulting from telemedicine and genetic testing fraud schemes. For example, in the Southern District of Florida, prosecutors charged an owner of telemedicine and durable medical equipment companies with a $46 million scheme in which Medicare beneficiaries were allegedly targeted through deceptive telemarketing campaigns and then fraudulent claims were submitted to Medicare for durable medical equipment and genetic tests for these beneficiaries. The Department continues to focus on eliminating health care fraud schemes that depend on telemedicine, including schemes involving fraudulent claims for genetic testing, durable medical equipment, and COVID-19 tests.

Breaking Down Silos in the Fight Against Health Care Fraud
In connection with the coordinated nationwide law enforcement operation, the Department is announcing that it is working closely with HHS-OIG, FBI, and other agencies to create a Health Care Fraud Data Fusion Center to bring together experts from the Department’s Criminal Division, Fraud Section, Health Care Fraud Unit Data Analytics Team; HHS-OIG; FBI; and other agencies to leverage cloud computing, artificial intelligence, and advanced analytics to identify emerging health care fraud schemes. The Health Care Fraud Unit’s Data Analytics Team was established in 2018 to enhance the Unit’s ability to detect, investigate, and prosecute complex health care fraud schemes. Joining forces with data analysts from HHS-OIG, FBI, and other partners will increase efficiency, detection, and rapid prosecution of emerging health care fraud schemes. It will also implement the President’s Executive Order Stopping Waste, Fraud, and Abuse by Eliminating Information Silos (Exec. Order No. 14243, 3 C.F.R. 294 (2025)) by reducing duplicative data teams, increasing operational efficiency through a whole-of-government approach, and leveraging cloud computing, artificial intelligence, and other agency resources.

What is striking about the broader “take down” and Operation Gold Rush is (i) the cooperation among enforcement agencies and (ii) the sophistication of the technology being used by the agencies. As reflected in the press release:

• Four people were arrested in Estonia and are being extradited to the U.S.
• There is a Health Care Fraud Unit Data Analytics Team that detects anomalous billing through data analytics.
• There is a Health Care Fraud Data Fusion Center that brings together (i) the DOJ’s Criminal Division, Fraud Section, and Health Care Fraud Unit Data Analytics Team, (ii) the OIG and (iii) the FBI. These agencies/departments “leverage cloud computing, artificial intelligence, and advanced analytics to identify emerging health care fraud schemes.”

There are several key axioms that DME suppliers should adhere to in this complex world:

• If a person’s brain tells the person one thing, but the person’s stomach tells him something else, the person should trust his stomach and ignore his brain. Our brains allow us to rationalize dishonest decisions. But our stomachs never lie.
• If something appears to be too good to be true, then walk away from it.
• It is better to make less money and sleep well at night than to make more money and lie awake at night.
• The fact that “everybody else is doing it” is not a defensed to a fraudulent arrangement.
• Many lead generation companies (“LGCs”) and sham telehealth companies are like swarms of locusts. They will fly from one victim to another. At the end of the day, while a few LGCs and sham telehealth companies will be called on to account for their actions, it is normally the DME supplier (the entity receiving money from Medicare) that gets into trouble. If a DME supplier gets “taken down” by the government, the LGC/sham telehealth company will just move on to their next victim.
• If a new DME supplier immediate starts to submit a large volume of claims to Medicare, that supplier will be scrutinized by an enforcement agency.
• If the number/amounts of claims submitted by an existing DME supplier increase dramatically over a short period of time, that supplier will be scrutinized by an enforcement agency.
• If a DME supplier moves into a new product line and starts submitting a large number of claims for the new products, that supplier will be scrutinized by an enforcement agency.

Jeffrey S. Baird, Esq. is Chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Texas with a national health care practice. He represents pharmacies, infusion companies, HME companies, manufacturers, and other health care 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].