DOJ’s Using Advanced Data Analytics and AI Tools to Combat Healthcare Fraud Before Payment

The U.S. government has announced record-breaking Medicaid fraud charges as part of its 2026 National Health Care Fraud Takedown, with the enforcement action resulting in charges for 455 defendants, including more than 90 doctors and other licensed medical professionals, in connection with more than $6.5 billion in healthcare fraud and opioid abuse claims.

The enforcement action involved a whole-government approach, including U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), HHS Centers for Medicare and Medicaid Services (CMS), and Drug Enforcement Administration (DEA), with cases in 56 federal districts, 45 U.S. states and territories, and 50 state Medicaid Fraud Control Units participated, more than ever before. There was also unprecedented international cooperation over the two-week takedown. The DOJ seized more than $182 million in cash, luxury vehicles, jewelry, and other assets.

“We are aggressively scaling our offensive against anyone using health care as a front to steal from the American people,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division. “As today’s cases and arrests show, there is no case too big, no scheme too complex, and no hiding place too remote for our relentless fraud-fighting team. Our message is simple: if you put profit over patients, you should expect to be put in prison.”

Advanced Algorithms and AI Tools Used to Shift from Pay-and-Chase to Pre-Payment Detection

The takedown involved the use of cutting-edge data analytics algorithms and artificial intelligence tools to identify potential fraud before criminals cash out, rather than the reactive pay-and-chase approach of previous years. The use of AI tools for fraud prevention is set to expand significantly moving forward. AI tools were used to identify suspicious activity in many of the fraud schemes, including the first-ever criminal prosecution under the Data Fusion Center that was formed last year.

The Data Fusion Center was established to track, identify, and prevent fraudulent billing and medical scams and combines traditional data analytics with financial analysis and comprises experts from the Health Care Fraud Unit’s Data Analytics Team, HHS-OIG, FBI, and other agencies, supported by data sharing agreements between a wide range of government agencies. “Prosecuting criminals who steal from American patients is necessary—but stopping them before a single dollar leaves the building is smarter,” said CMS Administrator Dr. Mehmet Oz.

The Data Fusion Center helped identify a $67 million fraud scheme involving the billing of Illinois Medicaid for behavioral health services that were never provided. The defendant allegedly billed more than 500 hours a day for counselling and therapy services, which could not have been provided even if all providers on staff had been working 24 hours per day. The data analysis showed that patients were hospitalized at other institutions on days when the defendant billed for behavioral health services. Prosecutors opened the case within 5 days of the completion of the data analysis, and the defendant was arrested within 7 months while attempting to flee the country.

Actions by the CMS resulted in the suspension of 1,079 providers and the revocation of billing privileges for 1,403 providers. More than $73 million was obtained in 48 Civil Monetary Payment settlements accompanied by more than 1,400 exclusions, while 25 actions by HHS-OIG are seeking more than $10 billion in payments to the Medicare Trust Fund from payments identified by CMS and blocked before the funds were paid in fraudulent claims. CMS has announced that under a new arrangement, it will provide cloud computing space within its integrated data repository to support the DOJ fraud division’s data analysis algorithms and AI tools to combat health care fraud. Civil charges have been filed against 13 defendants for $14.8 million in health care fraud schemes, along with $23 million in civil settlements with 31 defendants. There have also been 928 administrative cases by the DEA seeking the revocation of authority to handle and prescribe controlled substances since October 1, 2025.

Fraud Costs Taxpayers and Causes Significant Patient Harm

Healthcare fraud costs U.S. taxpayers, exploits vulnerable patients and puts lives at risk, causing considerable patient harm, including death. In one case, the medical director of a cardiovascular testing and treatment practice in Florida was charged in connection with an $89 million fraud scheme to bill for medically unnecessary cardiovascular tests on student athletes. The director falsified diagnoses to defraud health care benefit programs for the testing and is alleged to have rubber-stamped test results as normal without checking them, in some cases stamping test results as normal within seconds.

Student athletes with cardiac abnormalities were not made aware that they were at high risk of sudden cardiac arrest. In one case, a patient’s test results showed an enlarged heart, but the results were signed off as normal. The patient died from complications from his enlarged heart within 24 hours of the test results being signed off as normal.

The DOJ highlighted fraud cases involving wound care, especially allografts, and hospice providers in its announcement, where fraud cases have increased significantly, and these are likely to remain key enforcement areas moving forward. Medicare billing for wound care more than doubled from $3.4 billion in 2023 to $7.5 billion in 2024 and almost doubled again in 2025 to $14.4 billion. The increase in payments was not due to medical necessity; rather, it was driven by illegal kickback and healthcare fraud schemes. Charges were filed in 6 districts for fraudulent claims for amniotic wound allografts against 11 defendants, including a company executive and 8 medical professionals.

In one scheme, a company that did not manufacture allografts obtained them from another firm, added a 2,000% mark-up, paid 40% of that in illegal kickbacks to marketers, and targeted hospice patients, providing medically unnecessary allografts, far exceeding the size of the wound, which were often provided without coordinating with the individual’s treating physician, without proper treatment for infection, and for superficial wounds that did not require the treatment, The defendant was paid more than $24 million by the company, with the marketers and medical professionals involved often paid between $500 and $600 per square centimeter of graft.

“Today’s historic enforcement action sends a clear message: if you use our health care system to enrich yourself at the expense of patients or the American people, we will find you, we will prosecute you, and we will hold you accountable,” said HHS Secretary Robert F. Kennedy, Jr. “HHS will continue working with our law enforcement partners to protect patients, safeguard taxpayer dollars, and restore integrity to our health care system.”

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Allina Health System to Pay $12.5 Million to Settle Pixel Litigation

Allina Health System, a nonprofit health system based in Minneapolis, Minnesota, that serves patients in Minnesota and Western Wisconsin, has agreed to pay $12,500,000 to resolve litigation over its use of website tracking technologies such as pixels. Those tools were alleged to have resulted in the disclosure of personally identifiable information (PII) and protected health information (PHI) to third parties such as Facebook (Meta) and Google, in violation of federal and state laws.

Those tools are extensively used on websites for marketing and advertising purposes. The tools collect information about website usage, and that information can be used to improve web services. It can also be used to serve targeted advertisements to individuals, based on their interactions on a website. Depending on how they are configured, these tools can collect individually identifiable health information when installed on healthcare providers’ websites, and if they are used on authenticated pages such as a patient portal, that information may include HIPAA-protected data.

The first lawsuit over the use of these tracking tools was filed by Plaintiff Jacqueline Ahlers on September 16, 2024, in the U.S. District Court for the District of Minnesota. An amended complaint was filed on February 12, 2025, adding a further two plaintiffs who had filed similar complaints. The consolidated lawsuit – Ahlers, et al. v. Allina Health System – asserted claims for invasion of privacy, breach of implied contract, unjust enrichment, breach of fiduciary duty, breach of confidence, negligence, and violations of the Electronic Communication Privacy Act, Minnesota Health Records Act, and Minnesota Unfair and Deceptive Trade Practices Act.

Allina Health System denies wrongdoing and liability; however, after considering the cost, distraction, burden, and risks associated with continuing with the litigation, Allina Health System agreed to a settlement.  Under the terms of the settlement, Allina Health System has agreed to pay $12,500,000 to resolve the complaint. From that amount, attorneys’ fees and expenses will be deducted, along with settlement administration and notification costs, and service awards for the class representatives.

The $12,500,000 will be split into two settlement funds: A Group 1 settlement fund of $10,303,098 and a Group 2 settlement fund of $2,196,902. The attorneys’ fees/expenses, settlement administration/notification costs, and service awards will be deducted from those settlement funds with an 82.42% (Group 1) and 17.58% (Group 2) split. The remaining funds will be paid pro rata to individuals submitting a claim.

The Group 1 settlement class consists of individuals who were patient portal users, non-portal bill pay users, and non-portal scheduling users between September 16, 2018, and May 11, 2026. The Group 2 settlement class consists of individuals who were non-portal, non-bill pay, and non-scheduling patients between September 16, 2018, and May 11, 2026.

The deadline for opting out of the settlement and objection to the settlement is August 10, 2026. Claims must be submitted by September 8, 2026, and the final approval hearing has been scheduled for September 24, 2026.

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Data Breaches Reported by Amicus Solutions: Huntsville Hospital Health System

Amicus Solutions (Fedora Solutions) has been affected by a cybersecurity incident, and Huntsville Hospital has confirmed it was affected by a January 2025 breach at Cerner (Oracle Health).

Amicus Solutions

Amicus Solutions, Inc., doing business as Fedora Solutions, a provider of managed IT and revenue cycle management services, has experienced a cybersecurity incident involving the protected health information of 1,137 individuals. According to the breach notification to the Massachusetts Office of Consumer Affairs and Business Regulation, the breach affected patients of medical practices managed by OneOncology, LLC, including New York Cancer and Blood Specialists.

Suspicious activity was identified within the Amicus Solutions network on April 2, 2026, with the unauthorized access believed to have occurred between February 2, 2026, and February 18, 2026. During that time, a threat actor exfiltrated data from its systems, and some of that data was posted to the threat actor’s website, including personally identifiable information and protected health information.

The data review confirmed that the threat actor obtained patient data such as first and last names, phone numbers, email addresses, birth dates, gender information, Social Security numbers, medical information, and health insurance information. Amicus Solutions confirmed that there was no unauthorized access to its clients’ networks. No misuse of that data had been identified at the time of issuing notifications. Amicus Solutions said additional safeguards have been implemented to harden security, and 24 months of complementary credit monitoring and identity theft protection services have been offered to the affected individuals.

Huntsville Hospital

Huntsville Hospital Health System in Alabama has recently announced that it has been affected by the January 2025 data breach at electronic health record vendor Cerner, now Oracle Health. The data breach affected approximately 90 healthcare providers, and many of those providers announced the data breach last year. Hackers gained access to two legacy Cerner servers as early as January 22, 2025, and Huntsville Hospital was informed that it was affected on August 12, 2025. The hospital said law enforcement requested delaying notifying the affected individuals and additional providers so as not to impede the investigation.

According to the hospital, the breach was confined to Cerner systems, which contained names, Social Security numbers, and details from medical records, including medical record numbers, doctors’ names, diagnoses, medications, test results, images, and treatment information. The affected individuals have been offered complementary credit monitoring services for 24 months. It is currently unclear how many Huntsville Hospital patients have been affected.

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Washington Dept. Health & Social Services Insider Breach Affects 8,600 Individuals

The Washington Department of Social and Health Services (DSHS) has identified an insider data breach involving unauthorized access to the protected health information of approximately 8,600 individuals.

Insider threats are a major problem in healthcare, more so than in other sectors. While most insider incidents are unintentional, and snooping on medical records is a common cause of healthcare data breaches. Patient records may also be obtained for financial gain. Regular workforce HIPAA training is important to remind employees of their responsibilities with respect to patient privacy, and employee access logs should be routinely monitored. Without active monitoring, these privacy violations can persist for long periods before unauthorized access is identified.

In this case, a DSHS employee was discovered to have accessed a DSHS internal client data system without authorization and viewed records containing full names, dates of birth, Social Security numbers, DSHS client numbers, and information about DSHS program enrollment.

The DSHS investigation found no evidence that health information was accessed, such as diagnoses, test results, treatments, claims, or chart notes. The DSHS said the employee was found to have accessed records for “reasons unrelated to their job duties,” but did not elaborate further on the individual’s reasons for access. It is also unclear when the unauthorized access was detected, or for how long the employee had been accessing records for non-work purposes.

DSHS confirmed that action was immediately taken when the privacy violations were identified, preventing further unauthorized access. DSHS has confirmed that the individual is no longer working for the department. It is unclear whether the employee was terminated over the HIPAA violation or if they left voluntarily.

DSHS said it is issuing notification letters by mail to all affected individuals and encourages them to monitor their account statements and credit reports for unauthorized activity. DSHS is cooperating with state and local law enforcement in their ongoing investigation. DSHS said steps are being taken to implement additional safeguards, and internal policies and procedures related to data privacy and security are being reviewed.

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South Florida Injury Centers; Chickasaw Nation Department of Health Report Data Breaches

A hacking incident has been reported by South Florida Injury Centers, and Chickasaw Nation Department of Health has discovered that an employee accessed patient data without authorization.

South Florida Injury Centers

South Florida Injury Centers, Inc., a medical practice with locations in Tamarac and Port Saint Lucie that specializes in treating patients injured in automobile accidents, has recently reported a hacking-related data breach to the HHS’ Office for Civil Rights that has affected up to 1,525 patients.

While few details have been released about the incident, this appears to have been a cyberattack by the threat actor Kairos. Kairos is a financially motivated threat group that engages in data theft and extortion, breaching networks, exfiltrating data, and demanding payment to prevent the data from being leaked online. The group has conducted attacks on several healthcare organizations and claims to have exfiltrated 45 GB of data from South Florida Injury Centers.

South Florida Injury Centers was added to its dark web data leak site on April 7, 2026, along with samples of the stolen data, which appear to contain redacted patient information such as names, contact information, driver’s license numbers, Social Security numbers, and medical histories. Kairos proceeded to leak the stolen data, indicating that the ransom was not paid.

Chickasaw Nation Department of Health, Oklahoma

Chickasaw Nation Department of Health in Oklahoma has identified an insider patient privacy incident that was first identified on April 22, 2026. An investigation was promptly initiated when unauthorized access to patient records was identified, and immediate steps were taken to prevent further unauthorized access.

The review of access logs confirmed that the privacy breach was due to the actions of a single employee, who had accessed patient records without authorization between December 1, 2025, and April 22, 2026. During that time, the records of 1,607 patients may have been accessed without authorization.

The information viewed included patient names, ages, dates of service, tribal affiliations, reasons for visits, and clinical information such as lab and radiology orders. No evidence was found to indicate that full Social Security numbers were viewed. The website notification about the privacy incident does not state the actions that have been taken against the employee over the privacy breach.

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