Healthcare Fraud

The modern crime began in the United States after Medicare and Medicaid were created in 1965; no single first case is credited, but Miami's billing rings of the 2000s, culminating in Philip Esformes's $1.3 billion scheme (charged 2016), made South Florida its notorious home.

False billing of health insurers is as old as insurance, but the modern crime grew with the US Medicare and Medicaid programmes created in 1965, which pay hundreds of millions of claims a year on trust. Congress passed the Anti-Kickback Statute in 1972 and made health care fraud a specific federal crime in 1996 (HIPAA), and the Medicare Fraud Strike Force was set up in Miami in 2007 after South Florida became the centre of durable-medical-equipment and HIV-infusion billing scams. Schemes have followed the money: home health and mental-health 'partial hospitalisation' in the 2000s, compounded drugs and opioid prescribing in the 2010s, genetic testing, telehealth and COVID-era claims after 2020, and in 2025 a transnational ring that bought up medical-supply companies to file $10.6 billion in catheter and equipment claims using stolen identities.

A provider, lab or supplier bills Medicare, Medicaid or a private insurer for services never delivered, not needed or 'upcoded' to a more expensive procedure. Patients are recruited with kickbacks (cash, groceries, rides), their ID numbers are reused across thousands of claims, and doctors are paid to sign orders they never review. Telemedicine call centres cold-call beneficiaries offering 'free' braces or cancer genetic tests, then labs bill for them. Insurers pay first and audit later, so money arrives within weeks and is moved through shell companies; the biggest rings now use stolen identities of doctors and patients so that no real provider is involved at all.

It pays like no other fraud: insurers reimburse within weeks on trust, a single Medicare number can be billed thousands of times, and the biggest rings now need no real doctor or patient at all, just stolen identities and shell suppliers. Detection is slow because claims are audited after payment; the 2025 takedown alleged $14.6 billion in intended loss and CMS said it stopped $4 billion of it before payment. Prosecution is strong in the US, with hundreds charged each year and sentences up to 50 years, but the ringleaders of the largest 2025 scheme were abroad.

The NHCAA estimates fraud consumes at least 3% of US health spending, which on CMS's $4.9 trillion of 2023 spending would be about $150 billion; no agency publishes an audited total. The largest single case charged is the 2025 Operation Gold Rush ring, with $10.6 billion in claims, and the largest conviction is Esformes's $1.3 billion. The harm is physical too: Farid Fata gave chemotherapy to 553 patients who did not need it, and kickback-driven opioid prescribing fed the overdose crisis.