The federal government has just restructured and dramatically expanded its health care fraud enforcement capabilities. This development will directly impact physicians, hospitals, health systems, home health agencies, pharmacies, medical device suppliers, as well as any other participants in government-funded health care programs.
On April 7, 2026, the acting attorney general issued a formal memorandum establishing the National Fraud Enforcement Division (NFED) within the Department of Justice. At the center of this new division is the U.S. Department of Justice’s (DOJ) existing Health Care Fraud Unit. It is now placed under centralized command, equipped with expanded resources, and directed to pursue health care fraud with greater coordination and firepower than ever before.
As health care attorneys, we are writing this article to make sure our clients and the broader health care community understand what has changed, what it means for their businesses, and what steps they should take right now.
The Health Care Fraud Unit Is Now Part of Something Much Bigger
Effective immediately, the assistant attorney general for the NFED assumed operational control of the Criminal Division's Health Care Fraud Unit, alongside the Tax Section and the Market Unit, Government Unit, and Consumer Fraud Unit. This is not a cosmetic change. The Health Care Fraud Unit was already one of the most active prosecutorial units in the federal government. It is now embedded within a division with the sole mission of fraud enforcement, with dedicated leadership, centralized resources, and a mandate to expand.
Recognizing that health care fraud is threatened by increasingly sophisticated and opportunistic tactics, the department determined that greater resources should be allocated to combat fraud, waste, and abuse. Medicare, Medicaid, and other federal health care programs collectively represent one of the largest pools of government spending in the country, which makes health care providers among the most prominent targets of this new enforcement initiative.
More Prosecutors. More Agents. More Forensic Accountants. In Every District.
One of the most consequential aspects of the NFED directive is its nationwide reach. Each U.S. Attorney's Office across the country is required to designate an experienced prosecutor to be delegated to the NFED. Each district's representative is responsible for administering the mission of the NFED in their district, and each United States Attorney must ensure that investigations and prosecutions of fraud against taxpayer-funded programs are adequately staffed and diligently pursued.
This means there is now a dedicated NFED-aligned prosecutor in each jurisdiction, one whose job it is to find and pursue health care fraud cases in each community.
The enforcement apparatus does not stop there. The FBI has been directed to coordinate with the NFED and relevant law enforcement agencies, including agency inspectors general, to ensure sufficient resources are allocated to investigating fraud against taxpayer-funded programs. It has also been directed to increase the number of agents, analysts, and forensic accountants available to conduct those investigations.
For health care providers, this combination of specialized prosecutors and expanded investigative personnel is significant. It means the government will have the human capital to pursue more investigations simultaneously, as well as the financial expertise to scrutinize billing records, cost reports, and reimbursement claims in far greater detail.
A New National Fraud Detection Center: Your Claims Are Being Analyzed
Perhaps the most consequential development for health care organizations is this: The NFED is tasked with establishing a National Fraud Detection Center dedicated to identifying fraud across taxpayer-funded programs and generating leads for investigators and prosecutors.
In practical terms, this means the government is building a centralized analytical engine designed to proactively identify anomalies, outliers, and patterns in claims data. It will then convert those findings into investigation referrals. Health care providers who bill Medicare, Medicaid, TRICARE, or other federal programs should understand that their billing patterns may be subjected to data-driven scrutiny at a scale and sophistication that did not previously exist in one centralized place.
Civil and Criminal Exposure Simultaneously
The investigations that the NFED will undertake will likely expose providers to both civil and/or criminal liability. The civil division has been directed to designate a liaison to the NFED to ensure that the department uses all civil means to recoup any misappropriated payment.
For health care providers, this dual-track approach has serious implications. The government's primary civil tool in health care fraud cases is the False Claims Act (FCA), which allows the DOJ and private whistleblowers to pursue damages and per-claim penalties against providers who submit false or fraudulent claims for payment. Civil FCA investigations can proceed in parallel with criminal investigations, meaning a provider may simultaneously face potential criminal prosecution and enormous civil financial liability.
The NFED's explicit coordination between its criminal and civil arms means that a case that begins as a criminal inquiry can quickly develop a civil component and vice versa. While this has always been the case, it is expected that the NFED will likely ensure better coordination between both divisions.
What Types of Health Care Fraud Are Enforcement Priorities?
Based on the historical priorities of the Health Care Fraud Unit and the NFED's mandate to pursue fraud of any size against taxpayer-funded programs, health care providers should be particularly attentive to the following risk areas:
- False or upcoded billing: submitting claims for services not rendered, or at a higher level of care than actually provided
- Anti-Kickback Statute and Stark law violations: improper financial relationships between referral sources and providers
- Home health and hospice fraud: billing for ineligible patients, services not medically necessary, or services not actually delivered
- Durable medical equipment (DME) fraud: fraudulent orders, unnecessary equipment, or kickback arrangements
- Pharmacy and prescription drug fraud: billing for drugs not dispensed, or illegal relationships with prescribers
- COVID-era program fraud: the memo specifically notes the government's commitment to pursuing fraud in taxpayer-funded programs, which include pandemic-era relief programs
- Telehealth fraud: improper billing under expanded telehealth coverage rules
What Health Care Providers and Organizations Should Do Now
The creation of the NFED is a clear signal that the federal government's approach to health care fraud enforcement is becoming more centralized, more sophisticated, and more aggressive. Those who take a proactive approach to reviewing their current practices are in better positions to avoid audits and enforcement actions.
We recommend the following immediate steps for health care organizations of all types and sizes:
1. Conduct a Proactive Compliance Assessment: Review your current billing practices, coding procedures, and documentation standards against applicable Medicare, Medicaid, and payor requirements. Identify gaps before a government auditor does.
2. Evaluate Your Financial Relationships: Examine all arrangements with physicians, referral sources, vendors, and other health care entities for compliance with the Anti-Kickback Statute, Stark Law, and applicable safe harbors and exceptions.
3. Strengthen Your Compliance Program: Ensure your organization has a robust, functioning compliance program. A well-documented compliance program is one of the most important tools available in defending against government scrutiny.
4. Audit Your Claims Data: Consider retaining qualified legal counsel to conduct a privileged internal audit of your billing and claims data to identify any patterns that could attract government attention. Voluntary self-disclosure, when appropriate, can result in significantly more favorable outcomes than a government-initiated investigation.
5. Know Your Rights if a Government Inquiry Arrives: If you receive a subpoena, a Civil Investigative Demand (CID), a request for records from the HHS Office of Inspector General (OIG), or a visit from federal agents, do not respond without experienced health care counsel. The way you respond to initial government contact can have profound consequences for how a matter develops.
How Your Much Health Care Attorney Can Help
Much’s health care attorneys focus on the legal challenges facing providers, health systems, and health care organizations. We understand the False Claims Act, the Anti-Kickback Statute, Stark Law, and the full range of regulatory obligations that govern participation in federal health care programs. And we understand how the government builds and pursues health care fraud cases.
Whether your organization needs help assessing compliance risk, structuring financial arrangements properly, responding to a government inquiry, or defending against a fraud investigation, we are here to guide you.