“Don’t be another Theranos.” The Justice Department delivered that blunt warning to health care executives this week, alongside new guidance expanding corporate fraud investigations and offering leniency to companies that come forward on their own.
As the Trump administration presses its fight against Medicare and Medicaid fraud, the department is widening its investigations of corporate wrongdoing. Jacob Foster, deputy assistant attorney general in the National Fraud Enforcement division, outlined the approach Thursday at the STAT Summit in Boston. He oversees the unit that investigates health care fraud.
A One-Stop Shop for Self-Disclosure
The centerpiece is a simpler route for companies reporting possible criminal activity. Firms making voluntary disclosures will now have one point of contact at the DOJ. Previously, they had to navigate a separate process at the Department of Health and Human Services. The DOJ’s health care fraud section now handles that process.
“What do you do? Who do you call? That’s a question that industry shouldn’t have to ask,” Foster said.
The incentives are concrete. Companies that report possible criminal misconduct can receive benefits from both agencies at once, including a limited cap on financial damages. Foster said the department wants to hear from companies when compliance failures happen. “There’s nothing more that we want to know when a compliance failure occurs than to hear about the great efforts to remediate it, and reward that,” he said.
Data, Algorithms and Whistleblowers
The DOJ plans to use technology to spot problems. Foster said the department will apply data analytics and artificial intelligence algorithms to flag possible corporate wrongdoing. Targets include providers billing for unneeded services, companies fabricating patient records and health tech companies adding redundant diagnoses. The health care fraud section brings expertise together to address issues such as digital health technology.
Investigators aren’t limiting their work to billing data. They also review social media, news reports and other sources for information about companies that may be breaking the law, Foster said.
Whistleblowers are part of the strategy, too. An Oct. 1 memo from Assistant Attorney General Colin M. McDonald says the department will design new programs that “appropriately incentivize” whistleblowers to report fraud.
Where Prosecutors Will Focus
The McDonald memo tells prosecutors to give extra attention to schemes involving health care, controlled substances and violations of the federal Food, Drug, and Cosmetic Act. It also lays out factors to consider. Prosecutors should give “great weight” to whether corporate executives knew about or tried to conceal fraud, whether a scheme lasted over three years or crossed various states, and whether it affected taxpayer-funded programs.
That last factor is central to Foster’s argument. “No one, irrespective of party, likes the government being ripped off by wrongdoers,” he said Thursday. “These cases not only involve the theft of all of our tax dollars, [but] involve the theft from a program, a trust fund — Medicare — that could run out.”
Why This Matters:
The policy pairs enforcement with a clear market signal: companies that police themselves and come forward early get a cap on damages, while executives who conceal fraud face scrutiny. That’s a rule-of-law approach that rewards compliance rather than relying on penalties alone. Taxpayer dollars sit at the center of the case, too. Medicare is a trust fund Foster warned could run out, making every fraudulent claim a real fiscal cost. Consolidating disclosure at the DOJ may reduce red tape for honest firms. But the department’s heavy use of AI and data analytics will test how well it distinguishes actual misconduct from legitimate billing, and how much compliance burden falls on the industry.
- department of justice
- health care fraud
- medicare
- medicaid
- jacob foster
- colin m. mcdonald
- whistleblowers
- corporate wrongdoing