In the United States, healthcare fraud is a huge problem. During fiscal year 2025, the U.S. Department of Justice (DOJ) recovered a record $6.8 billion through False Claims Act (FCA) enforcement.
Over $5.7 billion of that came from healthcare fraud involving Medicare, Medicaid, prescription pricing, kickbacks, and unnecessary services. And DOJ data tells us that over $5.3 billion of healthcare fraud recoveries were due to whistleblowers.
In this study, we’ll look at the different types of healthcare fraud, plus the measures being taken to prevent it, with a particular focus on the West Coast Strike Force, a healthcare fraud enforcement initiative.
We’ll consider healthcare fraud across America: the states and people most affected. And we’ll examine some key healthcare fraud case examples, plus the role of whistleblowers, and the financial permutations of fraud prevention or recovery.
Let’s start by focusing on the Justice Department’s continuing measures to nullify healthcare fraud.
Healthcare Fraud and The Department of Justice Response
The Justice Department’s National Fraud Enforcement Division recently introduced the West Coast Health Care Fraud Strike Force, a multi-district initiative that combines the Division’s Health Care Fraud Section with the U.S. Attorney’s Offices for Arizona, Nevada, and Northern California.
The Health Care Strike Force model, one of the federal government’s most effective enforcement tools, has so far led to the prosecution of more than 6,200 defendants across the U.S. Between them, the defendants collectively billed federal health care programs and private insurers over $45 billion.
On April 7, the Department of Justice inaugurated the Fraud Division, which will specifically investigate fraud against the American people. The effort supports President Trump’s Task Force to Eliminate Fraud, chaired by Vice President J.D. Vance, which aims to reduce fraud and waste in federal benefit programs.
The new West Coast Strike Force is effectively an expansion of an enforcement initiative first launched in the late 2000s (according to Meredith Williams, counsel at Barnes & Thornburg).
The Trump Administration’s first healthcare-centric fraud unit was established in Massachusetts, already a major U.S. healthcare and life sciences hub. Arizona, Nevada, and Northern California have also been chosen as fraud-fighting hubs for similar reasons.
In Northern California’s case, it’s a center for AI innovation that’s increasingly folded into healthcare. Because AI and advanced technologies play a growing role in healthcare fraud, the Department of Justice has deployed additional enforcement resources to spot and prevent criminal activity early.
There’s also an increase in multi-state fraud schemes, including controlled-substance cases that involve telehealth companies prescribing medications across state lines.
The deployment of the West Coast Strike Force follows a record year for healthcare enforcement. In 2025, the DOJ led its largest-ever initiative, the National Health Care Fraud Takedown, which pursued more than $15 billion in alleged losses, of which it recovered over $560 million.
An independent analysis confirmed that every dollar invested in the Health Care Fraud Section generated an average return of $106.76 by year 10, with over $4.5 billion in total projected savings.
“Driven by data showing a significant and accelerating increase in health care fraud across all three districts, the Strike Force builds on recent landmark prosecutions,” said Assistant Attorney General Colin McDonald. McDonald also cited successful cases involving digital health technology executives in Northern California and Medicaid, and wound care fraud schemes in Arizona.
In FY 2024, the Fraud Prevention System disrupted an estimated $207 million in improper Fee-For-Service payments through pre-payment claim screening. CMS (the agency that administers the Medicaid program) continues to focus on expanding fraud detection, improving system performance, and incorporating policy updates.
Although fraud prevention is a broad and complex process, it’s worth narrowing our focus to look at specific examples of fraud types and some recent key prosecutions.
Key Healthcare Fraud Investigations and Prosecutions
According to the latest annual report from the Medicare Payment Advisory Commission, hospice provider growth has rapidly increased (at rates well above the national average) in several states, including Arizona, Nevada, and California.
Major fraud investigations in Arizona have involved Medicaid billing, sober homes, and wound care schemes that cost taxpayers billions of dollars. Nevada has also faced increased attention due to Medicare and hospice fraud as its senior population has rapidly grown.
“Silicon Valley has become ground zero for technology-driven health care fraud schemes that seek to cheat taxpayer-funded programs like Medicare,” said Craig H. Missakian, U.S. Attorney for the Northern District of California.
Some key recent prosecutions highlight the important efficacy of fraud enforcement efforts.
- United States v. Gehrke and King (Arizona): Two wound graft company owners were imprisoned for 15.5 and 14 years for their part in a $1.2 billion Medicare and Medicaid fraud scheme. Enforcement agents seized $126 million in assets, including cash, luxury vehicles, and gold bars.
- United States v. Ali (Arizona): A medical billing company owner was indicted for allegedly running a scheme that fraudulently billed Arizona Medicaid over $650 million through substance abuse treatment clinics.
- United States v. Schena (Northern California): The president of a Silicon Valley medical tech company was imprisoned for eight years following a landmark COVID-era securities and health care fraud case.
Federal regulators also increasingly focus on misused technology in healthcare reimbursement. In one specific case, New York-based payer Independent Health allegedly used a basic natural language processing tool that incorrectly coded patient conditions for government reimbursement. The case was settled for around $100 million in 2024.
Improper Medicare and Medicaid Payments
The estimated improper payment rate during FY 2025 for Medicare Fee–for–Service was 6.55% ($28.8 billion), down from 7.66% in FY 2024 and the ninth consecutive year below the federal compliance threshold.
Estimated improper payment rates were:
- Medicare Part C: 6.09% ($23.7 billion)
- Medicare Part D: 4.00% ($4.2 billion)
- Medicaid: 6.12% ($37.4 billion)
- CHIP: 7.05% ($1.37 billion).
Most improper payments were due to insufficient documentation as opposed to fraud. The increase in Medicaid and CHIP payment errors largely illustrates the gradual end of COVID-19 public health emergency flexibilities, including resumed eligibility redeterminations and provider revalidation obligations.
The estimated improper payment rate (FY 2025) for the Affordable Care Act’s Advance Premium Tax Credit program was 0.89% ($657 million). That figure was primarily due to manual processing errors.
A significant quantity also involved the right payments that nonetheless lacked the requisite documentation or didn’t follow the correct procedure when processed.
Under the Payment Integrity Information Act of 2019, improper payments are only deemed significant once they exceed $10 million and 1.5% of program payments, or $100 million (whatever the percentage). Across HHS programs, reviewers found that many improper payments were due to missing, insufficient, or incorrect documentation.
Healthcare fraud is a national problem that affects (based on current data) all U.S. states but one (Hawaii). Yet some states have a far bigger healthcare fraud problem than others, as the following data tables illustrate.
Healthcare Fraud: Key States
The following table reveals the ten states that feature the highest combined number of healthcare fraud and abuse/neglect convictions.
According to the data (and by a significant margin), Pennsylvania has recorded the highest number of cases nationwide. Arizona (6th), Nevada (8th), and California (10th) all make the top ten, in no small part due to the West Coast Health Care Fraud Strike Force.
Conversely, here are the states featuring the fewest convictions for healthcare fraud (or abuse/neglect) in the U.S. (also from FY 2025). As mentioned, Hawaii recorded no convictions; Wyoming and Montana just one apiece.
We’ve looked at key types of fraud, plus the states dealing with the biggest healthcare fraud issues. But it’s also worth considering some of the key causes of healthcare fraud.
Healthcare Fraud: Key Causes And Targets
Healthcare fraud is not a victimless crime: it affects individuals and businesses and causes billions of dollars in losses every year. It’s also a white-collar crime that involves making false healthcare claims for financial gain. A small number of providers and organized crime groups are responsible for a significant share of healthcare fraud.
Common fraudulent healthcare schemes
- Unnecessarily billing for more expensive services or procedures
- Misrepresenting non-covered treatments
- Insurance scams.
Some examples of fraud committed by medical providers
- Double-billing (submitting multiple claims for a single service)
- Phantom billing (billing for services or supplies that were not provided)
- Unbundling (billing separately for combined/grouped services)
- Upcoding (charging for a service more expensive than the one performed).
Some examples of fraud committed by patients and individuals
- False marketing (stealing insurance details to bill for fake services or for the purpose of identity theft)
- Identity theft/swap (using another person’s insurance or allowing the misuse of your own)
- Impersonation (unlicensed provision of or charging for services).
Some examples of prescription fraud
- Creating or using fake prescriptions
- Misdirecting legal prescriptions for illegal sale or use
- Doctor shopping (claiming multiple prescriptions for controlled substances from various providers).
High-risk targets of healthcare fraud
Healthcare fraudsters often target patients with serious conditions like cancer, diabetes, Alzheimer’s, and HIV, by using scams to promote ‘miracle cures,’ promoting unapproved supplements, or signaling the virtues of unregulated treatments that may delay real care.
Criminals engaging in healthcare fraud also target anti-aging and weight-loss markets, with things like unregulated HGH products, memory pills, and cosmetic devices.
Pain management and orthopedics are frequently the source of billing fraud, with unnecessary surgeries, durable medical equipment claims, and prescription drug misuse regularly prosecuted.
One reason there’s so much healthcare fraud is relatively simple: it’s a lucrative market. And that means the financial wins involved when fraud is exposed are often staggering.
The Financial Permutations of Exposing Fraud
We’ve already touched upon the U.S. Department of Justice’s record recovery of $6.8 billion through False Claims Act (FCA) enforcement, and the more than $5.7 billion from healthcare fraud involving Medicare, Medicaid, prescription pricing, kickbacks, and unnecessary services.
Whistleblowers drove the vast majority ($5.3 billion) of those 2025 recoveries via their filing of 1,297 qui tam lawsuits (another record). When individuals expose healthcare fraud, they can receive 15% to 30% of recoveries, with awards in major cases reaching tens or hundreds of millions.
Since 1986, the FCA has returned more than $85 billion, with whistleblowers responsible for over $60 billion. Their collective reward amounted to over $9 billion.
Healthcare fraud accounted for roughly 84% of FCA recoveries in 2025, reflecting the ongoing enforcement focus on Medicare Advantage impropriety, telehealth fraud, unnecessary procedures, and pharmaceutical misconduct.
The DOJ’s 2025 National Healthcare Fraud Takedown charged 324 defendants (including 96 licensed professionals) in cases involving $14.6 billion in intended losses. CMS also prevented an estimated $4 billion in fraudulent claims.
One of the fastest-growing fraud issues in 2025-2026 was AI–assisted healthcare fraud, including fake consent recordings, fraudulent telehealth visits, and identity theft misused to charge for nonexistent services.
In 2025, the Corporate Whistleblower Awards Pilot Program was expanded to cover additional private insurance fraud cases and offered rewards for information leading to forfeitures that exceeded $1 million.
Reuters reported that between January and May in 2025, the Department of Justice announced 128 FCA settlements that totaled over $1.25 billion, with healthcare representing the vast majority of cases.
Recent investigations also targeted Medicare Advantage kickback schemes that involved insurer-driven patient steering. In May 2026, the U.S. Supreme Court decided against allowing a challenge to the FCA whistleblower reward structure.
Fighting Against Evolving Healthcare Fraud
In the U.S., healthcare fraud is a hugely significant (and costly) issue. During fiscal year 2025, the U.S. Department of Justice (DOJ) recovered a record $6.8 billion, $5.7 billion from healthcare fraud involving Medicare, Medicaid, prescription pricing, kickbacks, and unnecessary services. And DOJ data tells us that over $5.3 billion of healthcare fraud recoveries were due to whistleblowers.
The deployment of the West Coast Strike Force continues the fight against healthcare fraud. In 2025, the DOJ’s largest-ever initiative, the National Health Care Fraud Takedown, pursued more than $15 billion in losses and recovered over $560 million.
An independent analysis confirmed that every dollar invested in the Health Care Fraud Section generated an average return of $106.76 by year 10, with over $4.5 billion in total projected savings.
According to the latest annual report from the Medicare Payment Advisory Commission, hospice provider growth has rapidly increased in several states, including Arizona, Nevada, and California.
Major fraud investigations in Arizona have involved Medicaid billing, sober homes, and wound care schemes that cost taxpayers billions of dollars. Nevada has also suffered significant Medicare and hospice fraud as its senior population has rapidly grown.
Every dollar invested in the Health Care Fraud Section generated an average return of $106.76 by year 10, with over $4.5 billion in total projected savings
By some distance, Pennsylvania was the state with the most healthcare fraud convictions. Texas was far behind in second place; Arizona, Nevada, and California were all in the top ten.
Some common fraudulent schemes include billing for more expensive services or procedures, misrepresenting treatments, and insurance scams. In terms of fraud committed by medical providers, examples include double-billing (submitting multiple claims for the same service) and phantom billing (billing for services never provided).
With new anti-fraud task forces deployed across the country regularly, plenty of work to counter healthcare fraud is already underway. In 2026, federal enforcement increasingly harnessed AI and data analytics, meaning abnormal billing patterns are now more likely to trigger investigations, especially when flagged by whistleblowers. Based on the data in this study, the billions saved from fraud enforcement efforts make its continual success paramount.
The federal government has ramped up its efforts to combat healthcare fraud, with a particular focus on hospice and home health billing schemes. Vice President JD Vance recently launched a nationwide initiative designed to root out fraud in taxpayer-funded healthcare programs.
Phoenix healthcare providers, business owners, and administrators need to be prepared, as these federal investigations will likely extend to Arizona.
If you or your organization is under scrutiny, you don’t have a moment to lose: immediate legal representation by a federal healthcare fraud lawyer in Phoenix can make all the difference to the outcome of your case.