DOJ Targets Over $500 Million in Health Care and COVID-19 Fraud Schemes Across Multiple Enforcement Actions

Key Takeaways 

• The US Department of Justice (DOJ) announced coordinated civil and criminal actions targeting more than $500 million in alleged fraud across Affordable Care Act (ACA) enrollment, Medicaid drug reimbursement, and COVID-19 relief programs.
• The cases highlight significant compliance risks related to false claims, kickbacks, marketing practices, and exploitation of program flexibilities.
• Federal enforcement efforts remain focused on protecting taxpayer-funded programs, with continued reliance on whistleblowers and interagency collaboration.

The DOJ announced a series of coordinated civil and criminal enforcement actions targeting more than $500 million in alleged fraud involving federal health care and pandemic relief programs, underscoring continued federal scrutiny of billing practices, telemarketing-driven enrollment, and reimbursement schemes.

The April 7, 2026, announcement spans cases involving ACA enrollment fraud, Medicaid drug reimbursement abuses, and misuse of COVID-19 tax credits, reflecting a broad enforcement focus across multiple taxpayer-funded programs.

ACA Enrollment Fraud Case Highlights False Claims Act and Marketing Risks

One of the largest actions involves AP of South Florida, LLC (APSF), an insurance brokerage that agreed to plead guilty to major fraud against the US and pay $27.6 million in restitution for its role in an ACA enrollment scheme.

In parallel, AssuredPartners, Inc, APSF’s former parent company, agreed to pay $107 million to resolve allegations under the False Claims Act (FCA) related to fraudulent ACA applications, although it was not criminally charged.

According to the DOJ, APSF used “street marketers” to target vulnerable populations—including individuals experiencing homelessness or substance use disorders—and allegedly induced enrollment in fully subsidized ACA plans through cash and gift card incentives. Employees then submitted applications containing false income information to qualify individuals for advanced premium tax credits (APTCs), generating more than $141 million in unwarranted federal subsidies.

The conduct raises multiple compliance concerns relevant to health care stakeholders, including:

• FCA exposure tied to submission of false eligibility data 
• Improper beneficiary inducements, which may implicate anti-kickback and beneficiary inducement prohibitions 
• Marketing and enrollment practices, particularly in vulnerable populations 
• Use of special enrollment periods, including alleged manipulation of Medicaid denial letters 

The case originated from a whistleblower complaint, with the relator receiving $24.3 million, reinforcing the continued importance of qui tam actions in uncovering large-scale fraud.

Medicaid Reimbursement Scheme Reflects Ongoing Scrutiny of Drug Pricing and Prescribing Practices

In a separate criminal matter, a California individual pleaded guilty to orchestrating a $270 million scheme involving fraudulent claims submitted to Medi-Cal for high-cost prescription drugs that were medically unnecessary or not dispensed.

The scheme allegedly exploited a temporary suspension of prior authorization requirements during a system transition, enabling billing for compounded or specially formulated generic drugs that fell outside standard reimbursement caps.

Key compliance risks highlighted in this case include the following:

• Exploitation of reimbursement gaps or policy changes, such as prior authorization suspensions 
• Kickbacks for patient referrals and prescription generation, implicating the Anti-Kickback Statute (AKS)
• Prescribing without medical necessity, including use of pre-signed or pre-filled prescriptions 
• Inflated pricing through customized formulations designed to evade reimbursement limits 

The case also involved alleged money laundering to conceal proceeds, and significant asset forfeiture, illustrating the financial enforcement tools often used in large-scale fraud prosecutions.

COVID-19 Tax Credit Fraud Signals Continued Enforcement Beyond the Public Health Emergency

The DOJ also announced the sentencing of a Nevada business owner to 54 months in prison for a scheme involving nearly $100 million in fraudulent claims tied to pandemic-era employment tax credits.

The defendant filed more than 1200 tax returns claiming employee retention and paid leave credits for ineligible businesses, resulting in approximately $33 million in payouts from the Internal Revenue Service (IRS).

Although outside traditional health care reimbursement systems, the case reflects ongoing enforcement activity related to pandemic relief programs, with implications for the following:

• Documentation and eligibility verification requirements 
• Third-party preparer liability 
• Post-payment audit and recovery efforts 

Broader Enforcement Implications for Health Care and Life Sciences Stakeholders

Collectively, the actions highlight the DOJ’s continued focus on safeguarding federal health care and relief programs through coordinated criminal and civil enforcement.

Several cross-cutting themes emerge for compliance professionals:

• Increased scrutiny of marketing-driven patient acquisition models, particularly those involving third-party marketers 
• Continued enforcement of FCA and AKS violations tied to reimbursement and prescribing practices 
• Heightened risk associated with program flexibilities or temporary policy changes, which may create opportunities for abuse 
• Ongoing reliance on whistleblowers and interagency collaboration (DOJ, US Department of Health and Human Services Office of Inspector General, Federal Bureau of Investigation, IRS) 

As federal agencies continue to prioritize fraud enforcement across health care and related programs, organizations involved in insurance enrollment, pharmacy services, telehealth, and billing operations face sustained pressure to ensure robust compliance controls and documentation practices.

Reference

Justice department prosecutes a half-billion dollars in healthcare and COVID fraud schemes exploiting taxpayer funded programs. Press release. DOJ. Published April 7, 2026. Accessed April 8, 2026. https://www.justice.gov/opa/pr/justice-department-prosecutes-half-billion-dollars-healthcare-and-covid-fraud-schemes