How the Justice Department carried out a $14.6B healthcare fraud takedown

The Department of Justice’s unveiling this week of sweeping charges against more than 300 defendants who allegedly defrauded Medicare and other taxpayer-funded programs came as part of the department’s annual “takedown” event.

The healthcare fraud takedowns have been a practice at the DOJ for more than a decade, but officials touted this one as the largest on record. It stood out not only for its size but also because it focused on transnational criminals and broached artificial intelligence.

“This takedown represents the largest healthcare fraud takedown in American history,” DOJ Criminal Division head Matthew Galeotti said. “But it’s not the end. It’s the beginning of a new era of aggressive prosecution and data-driven prevention.”

This year’s operation led to 324 defendants being charged for submitting billions of dollars in allegedly fraudulent healthcare claims, including for medical care that patients never ended up receiving or that they received unnecessarily.

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A DOJ official told reporters after the announcement that the work was “strategically coordinated” so that the takedown involved “all new indictments, complaints, [and] informations.”

Charges were brought across 50 federal districts and, according to the official, all were brought or unsealed during a three-week period leading up to the takedown announcement.

Galeotti said the intended false claims totaled $14.6 billion. The actual losses reached $2.9 billion, he added.

Another DOJ official told Fox News Digital the purpose of the annual takedowns is “to raise public awareness and deter wrongdoers from engaging in this crime.” The official noted that Operation Brace Yourself, a 2019 takedown, led to an estimated reduction of $1.9 billion being charged to Medicare for certain types of orthotic braces.

“Every fraudulent claim, every fake billing, every kickback scheme represents money taken directly from the pockets of American taxpayers, who fund these essential programs through their hard work and sacrifice,” Galeotti said.

International scam

The charges announced this week spanned the globe, and DOJ officials said that in addition to four arrested in Estonia and another seven arrested at airports or the U.S.-Mexico border, the department was working to extradite others overseas who are accused of crimes.

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Those defendants were part of an alleged scheme coined “Operation Gold Rush,” which resulted in at least 20 members of a transnational criminal organization, including defendants based in Russia, being charged as part of a Medicare and money laundering operation that centered on catheters.

The group behind the scheme allegedly used foreign ownership entities to buy dozens of medical supply companies and then used stolen identities and confidential health data to create and file $10.6 billion in claims with Medicare.

“We are seeing a disturbing trend of transnational criminal organizations engaging in increasingly sophisticated and complex criminal schemes that defraud the American healthcare system,” Galeotti said.

Two owners of Pakistani marketing organizations were among those charged in an alleged $703 million scheme in which they used artificial intelligence to create fake recordings of Medicare recipients consenting to receive medical supplies.

“We are concerned about the criminals’ advancement in technology here, obviously,” Galeotti said.

Dr. Mehmet Oz, the Centers for Medicare and Medicaid Services administrator who oversees the Medicare program, was pressed by a reporter about why fraudsters were so easily able to penetrate the Medicare payment system.

Oz said CMS is working to meet the moment. The agency has “already launched a model. It is designed to use artificial intelligence and other more cutting-edge tools to address the fraud that exists in healthcare,” Oz said.

Behind the scenes

Investigating and prosecuting fraudsters is work that relies heavily on data. The DOJ’s healthcare fraud unit has since 2018 had its own in-house team that analyzes data, one of the DOJ officials told Fox News Digital.

The team’s techniques include identifying “aberrant billing levels” and other suspicious billing patterns, as well as fraudulent practices that appear to move from one region to another. The team’s ability to spot emerging trends, such as medical care professionals using skin grafts for wound care, also helps.

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One set of charges in the takedown involved three defendants in Arizona who allegedly purchased these types of skin grafts, known as “amniotic wound allografts,” and unnecessarily applied them to elderly Medicare recipients, including hospice patients in their final days. The defendants allegedly reaped millions of dollars from the practice.

“Patients and their families trusted these providers with their lives. Instead of receiving care, they became victims of elaborate criminal schemes,” Galeotti said.

DOJ officials said they plan to use a “fusion center” as part of their healthcare fraud crackdown. The center will combine data across agencies and is designed to create a more efficient analysis process.

The Drug Enforcement Administration (DEA) is also involved in healthcare fraud work. A DEA official said during the takedown announcement that the agency’s investigations included doctors, pharmacists and pharmacy owners.

Fifty-eight cases involved the illegal distribution of an estimated 15 million pills of opioids and other controlled substances, he said.

“These pills ended up on our streets in the hands of dealers and in the path of addiction,” the DEA official said.

Overall, dozens of medical care professionals, including 25 doctors, were charged in the takedown.