HHS Using AI to Address Ongoing Audit Noncompliance

HHS Using AI to Address Ongoing Audit Noncompliance

On May 21, the US Department of Health and Human Services (HHS), through the Office of the Assistant Secretary for Financial Resources (ASFR), introduced AERO, the Audit Enforcement and Risk Oversight initiative. This department-wide effort aims to strengthen program integrity by ensuring that states and grantees are held responsible for ongoing audit noncompliance. In an official letter sent to all state governors and treasurers, HHS stated it will no longer accept chronic audit failures, unresolved issues, or late submissions of audits.

ASFR is using advanced artificial intelligence (AI) tools to review five years of single audit data for all 50 states. HHS found that many states and grantees have unresolved internal control issues and that hundreds have failed to submit required audits — some overdue by two years. HHS plans to enforce accountability under the Single Audit Act and Uniform Guidance, which may include withholding payments, disallowing costs, suspending or ending awards, starting debarment, or stopping future federal funding.

HHS’ press release announcing AERO is available here.

DOJ Issues Directive to Accelerate Review of Benefits Fraud Qui Tam Actions

On May 27, Assistant Attorney General Brett A. Shumate issued a memorandum to attorneys in the Commercial Litigation Branch’s Fraud Section and Assistant US Attorneys directing the US Department of Justice (DOJ) to accelerate its review and enforcement of False Claims Act (FCA) cases involving fraud on federally funded benefits programs. The memorandum, which follows President Trump’s March 2026 Executive Order entitled “Establishing the Task Force to Eliminate Fraud,” targets schemes that exploit federal benefits programs and outlines new protocols to expedite the DOJ’s handling of qui tam actions alleging benefits fraud. 

Under the new framework, the DOJ will prioritize completing its review of new benefits fraud qui tam actions within the 60-to-120-day statutory period described in the FCA. Once the review is complete, the DOJ will either permit the relator to proceed with primary litigation responsibility, continue its investigation, or dismiss the qui tam for lack of specificity or legal deficiency. 

In determining whether a relator should promptly proceed to litigate a benefits fraud qui tam, the memorandum identifies several relevant considerations, including whether the complaint alleges an FCA violation, whether the facts are corroborated by available information (such as data analytics, agency information, or the relator’s inside knowledge), whether the scheme is not novel or complex, whether potential damages fall below the $10,000,000 settlement authority delegated to the Director of Civil Fraud, and whether aggravating factors are present such as beneficiary harm, ongoing misuse of federal funds, or concealment by the defendant. When permitting a relator to proceed with litigation, the DOJ expects the whistleblower and counsel to shoulder the obligations of the litigation, including ensuring the complaint has sufficient details and particularity to meet pleading requirements and that burdens and costs on the government are minimized.

Where continued investigation is appropriate, the assigned attorneys must develop an investigative plan on an expedited 120-day timeline (the “Investigative Period”) that includes a schedule for prompt issuance of Inspector General subpoenas and Civil Investigative Demands (CIDs) and early witness interviews. Information requests must be tailored to the issues under investigation, and early witness interviews should be considered as alternatives to certain categories of document production. If a defendant fails to meet a response deadline without justifiable reason, the DOJ should file an action to enforce the subpoena or CID. Attorneys are encouraged to request assistance from the relator’s counsel to help expedite the investigation, and to consider making an intervention decision once there is evidence of liability and the general parameters of the government’s loss, rather than delaying to develop a detailed damages assessment. At the expiration of the Investigative Period, attorneys must assess the case for an election decision, with extensions requiring approval from the Deputy Assistant Attorney General and subsequent extensions requiring approval from the Assistant Attorney General. 

The memorandum also directs the DOJ to adopt a whole-of-government approach to benefits fraud enforcement. New matters will be promptly referred to the Criminal Division and the National Fraud Enforcement Division for evaluation of potential criminal violations and shared with the affected agency for possible administrative action, including payment suspension. 

The DOJ’s press release and memo are available here.

Multinational Investment Company Owner Sentenced to 12 Years for Role in $2 Billion Fraud, Money Laundering, and Bribery Schemes

On May 26, Greg Lindberg of Tampa, Florida, founder and chairman of Eli Global LLC and owner of Global Bankers Insurance Group (GBIG), was sentenced to 12 years in prison for his role in a bribery conspiracy and multibillion-dollar fraud conspiracy that bankrupted multiple insurance companies, leaving thousands of policyholders unpaid. In May 2024, a federal jury convicted Lindberg — following a mistrial — of conspiracy to commit honest services wire fraud and bribery, and in November 2024, he pleaded guilty to conspiracy to commit offenses against the United States and conspiracy to commit money laundering.

According to the government, from at least 2016 through 2019, Lindberg and others conspired to defraud various insurance companies, regulators, and hundreds of thousands of policyholders by deceiving the North Carolina Department of Insurance (NCDOI), evading regulatory requirements, concealing the true financial condition of his companies, and improperly using insurance company funds for personal benefit. Lindberg directed companies he controlled in North Carolina, Bermuda, Malta, and elsewhere to invest more than $2 billion in loans and other securities with his own affiliated entities and laundered the proceeds. 

Lindberg personally benefitted by “forgiving” more than $125 million in loans to himself from insurance companies he controlled and used his ill-gotten gains to purchase private jets, mansions, and a 200-foot luxury yacht. As the fraud began to unravel, Lindberg engaged in a bribery scheme from April 2017 to August 2018, providing the NCDOI Commissioner millions of dollars in campaign contributions and other things of value in exchange for the removal of a Senior Deputy Commissioner responsible for overseeing GBIG’s regulation. To date, thousands of individual policyholders and other victims are collectively still owed more than $1 billion. 

The case is captioned United States v. Lindberg, et al., No. 3:23-CR-00048, No. 5:19-CR-00022 (W.D.N.C.). 

The DOJ’s press release is available here.

Humana Executives Sued By Investors for Alleged Kickback Scheme

On May 26, Steven Jones filed a stockholder derivative complaint on behalf of Humana Inc. against 17 current and former officers and directors, alleging that from at least 2016 through 2021, the defendants knowingly permitted and directed a scheme of unlawful broker steering payments and discriminatory enrollment practices in Humana’s Medicare Advantage business. 

Specifically, Jones alleges that the defendants approved payments to large national insurance brokers — including GoHealth, SelectQuote, and eHealth — under the guise of “co-op” or “market development fund” agreements that functioned as disguised kickbacks tied to enrollment volumes, in violation of the Anti-Kickback Statute and the FCA. He further alleges that the defendants pressured brokers to reduce enrollment of disabled Medicare beneficiaries whom the company viewed as less profitable, in violation of the Centers for Medicare & Medicaid Services’ (CMS) nondiscrimination regulations. 

Additionally, Jones alleges that from July 2022 through October 2024, the defendants concealed a significant surge in post-pandemic medical costs by misrepresenting the impact of rising utilization on earnings and actively overstating the company’s Medicare Advantage Star ratings. When CMS published the 2025 Star ratings in October 2024, only 25% of Humana’s members were enrolled in plans ranked four stars or higher, down from 94% the prior year, putting approximately $3 billion in quality bonus payments at risk and triggering a $9.6 billion market capitalization loss. He further alleges that six insider-selling defendants sold a combined $201.8 million in personally held Humana stock while in possession of material, nonpublic information. 

On May 1, 2025, the DOJ announced its intervention in an FCA case against Humana, and on March 25, a US District Judge in the District of Massachusetts largely denied the defendants’ motion to dismiss. 

The complaint asserts claims for violations of Section 10(b) of the Exchange Act and SEC Rule 10b-5, breach of fiduciary duty, and unjust enrichment, and seeks damages, disgorgement, corporate governance reforms, and injunctive relief. 

The case is captioned Jones v. Hilzinger, et al., No. 3:26-CV-392 (W.D. Ky.). 

The complaint contains allegations only. There has been no determination of liability.

Feeding Our Future Founder Sentenced to Nearly 42 Years for Fraud Scheme

On May 22, Aimee Bock, the founder and executive director of Feeding Our Future, was sentenced to 500 months — or almost 42 years — in prison for her lead role in a $250 million fraud scheme that exploited a federally funded child nutrition program during the COVID-19 pandemic. 

At trial, the government presented evidence that Bock and co-defendant Salim Said, former co-owner of Safari Restaurant, oversaw a scheme in which Feeding Our Future employees recruited individuals and entities to open federal Child Nutrition Program sites throughout Minnesota that claimed to serve thousands of meals daily within days of being formed. Bock and Said submitted false documentation, including fraudulent meal counts consisting of fake attendance rosters, and, after the Minnesota Department of Education paid the claims, disbursed the funds to co-conspirators. 

Bock and her associates set up numerous shell companies to fraudulently enroll in the program and launder proceeds. Feeding Our Future obtained over $18 million in unauthorized administrative fees, and employees solicited bribes and kickbacks from sponsored sites, often disguised as consulting fees or paid in cash.

In total, Feeding Our Future opened more than 250 federal Child Nutrition Program sites throughout Minnesota, going from receiving approximately $3.4 million in federal funds in 2019 to nearly $200 million in 2021. The defendants used the proceeds to purchase luxury vehicles, residential and commercial real estate in Minnesota, and to fund international travel. 

The case is captioned United States v. Bock, et al., No. 22-cr-223 (D. Minn.). 

The DOJ’s press release is available here.

Psychiatric Hospital Operator, Top Executives Agree to Pay $32 Million to Resolve FCA Allegations and Breach of CIA Agreement

On May 27, the DOJ announced that Oglethorpe Inc., a Tampa, Florida-based operator of psychiatric hospitals, along with its founder and principal owner Robert Cohen, CEO John Picciano, and COO James O’Shea, agreed to pay $32 million to resolve allegations that they violated the FCA by knowingly failing to return overpayments received from Medicare. 

The settlement resolves allegations that, from 2021 through the present, Oglethorpe and its executives knowingly failed to return overpayments that the company’s own consultants had identified, relating to beneficiaries admitted to two hospitals — Ridgeview Behavioral Hospital and Georgetown Behavioral Hospital — and a substance abuse clinic, The Woods at Parkside, who did not qualify for inpatient psychiatric care. 

Notably, in 2021, Oglethorpe entered a Corporate Integrity Agreement (CIA) with HHS’ Office of Inspector General following an earlier FCA settlement with the DOJ. As a result of violating that agreement, the defendants agreed to a voluntary exclusion from Medicare, Medicaid, and all federal health care programs for a period of 10 years beginning in July. 

The case is captioned United States ex rel. Treloar, et al. v. Oglethorpe, Inc., et al., No. 22-cv-00238 (M.D. Fla.). 

The claims resolved by the settlement are allegations only and there has been no determination of liability.

The DOJ’s press release is available here.

Jury Convicts Clinic Owner for $52 Million Health Care Fraud, Illegal Narcotics Distribution, and Kickback Scheme

On May 22, a federal jury in the Eastern District of New York convicted Tony Brown-Arkah, the owner of American Medical Centers (AMC), a medical clinic in Brooklyn, for his role in conspiracies to commit health care fraud, illegally distribute Suboxone, and pay and receive illegal health care kickbacks. According to the government, AMC purported to provide substance abuse treatment but instead lured patients to the clinic by illegally prescribing them Suboxone, a Schedule III narcotic. Brown-Arkah allowed a drug ring to operate inside and on the steps of his clinic, where drug dealers offered to buy patients’ Suboxone prescriptions for cash.

Patients were subjected to a host of substance abuse treatments and required to undergo invasive, medically unnecessary testing to obtain Suboxone prescriptions. Brown-Arkah billed Medicare and Medicaid for services that were never provided, paid illegal cash kickbacks to patients, and funneled patients to receive medically unnecessary laboratory testing in exchange for thousands of dollars each month in illegal kickbacks from the laboratory. Brown-Arkah concealed the kickbacks by creating a shell company and sham contract and lying to law enforcement about the purposes of the payments. In total, Brown-Arkah and his co-conspirators caused over $52 million in false claims to Medicare and Medicaid.

The jury convicted Brown-Arkah on conspiracy to commit health care fraud, 12 counts of health care fraud, conspiracy to illegally distribute narcotics, three counts of illegal distribution of narcotics, conspiracy to pay and receive kickbacks and to defraud the United States, and two counts of receipt of kickbacks. He faces a maximum penalty of 10 years in prison on each health care fraud, narcotics, and kickbacks conviction, and five years on the conspiracy to pay and receive kickbacks and defraud the United States conviction. Sentencing has not yet been scheduled.

The case is captioned United States v. Brown-Arkah, et al., No. 1:24-CR-00263 (E.D.N.Y.).

The DOJ’s press release is available here.

Fifteen Defendants Charged for $90 Million in Fraud as Part of Minnesota Health Care Fraud Takedown

On May 21, the DOJ announced the “Minnesota Health Care Fraud Takedown,” resulting in criminal charges against 15 defendants, including owners of childcare centers and various Medicaid providers, for their alleged participation in fraud schemes involving over $90 million in intended loss. The Takedown included the two largest Medicaid fraud cases ever charged in the District of Minnesota and first-of-their-kind charges involving additional Medicaid programs. 

The cases spanned multiple programs: a $46.6 million scheme to defraud the Early Intensive Developmental and Behavioral Intervention autism program (the largest Medicaid autism fraud case ever charged by the DOJ); first-ever criminal prosecutions involving fraud in Minnesota’s Integrated Community Supports ($1.4 million) and Individualized Home Supports ($22 million) programs; charges against eight defendants for defrauding the Housing Stabilization Services of approximately $15.7 million; and childcare fraud charges involving over $5 million. 

Alongside the Takedown, the DOJ announced a significant expansion of the Fraud Division’s Health Care Fraud Section, allocating funding to hire 15 new trial attorney positions to combat Medicaid fraud nationwide, and announced the expansion of the Midwest Strike Force to include the District of Minnesota. 

An indictment is merely an allegation. The defendant is presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

The DOJ’s press release is available here.

Regions Bank Resolves Ineligible PPP Loan Civil Liability With $4.9 Million Payment

On May 22, Regions Bank, headquartered in Birmingham, Alabama, agreed to pay approximately $4.9 million to resolve allegations that it received payments it should not have received from the United States in connection with approving forgiveness of a customer’s Paycheck Protection Program (PPP) loan that was not eligible for forgiveness. 

US Congress created the PPP in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act to provide federally guaranteed loans to small businesses suffering economic hardship due to the COVID-19 pandemic. The US Small Business Administration (SBA) administered the program, and upon forgiveness of a PPP loan, the SBA paid the lender the forgiven principal loan balance and any accrued interest. 

The United States alleged that, on or about August 3, 2021, Regions Bank approved forgiveness of a PPP loan that was not eligible for forgiveness, and that Regions Bank was unjustly enriched by the resulting SBA payment. 

The claims resolved by the settlement are allegations only and there has been no determination of liability.

The DOJ’s press release is available here.