Earlier this week, the DOJ announced its 2026 National Health Care Fraud Takedown, which according to the DOJ, represents “a new era in federal, state, and international cooperation to combat health care fraud,” with the greatest number of federal districts, US states and territories, and Medicaid Fraud Control Units (MFCUs) working together than ever before in DOJ’s history. The Takedown was structured as a “whole-of-government” approach and involved not only the DOJ, but also HHS OIG, CMS and the DEA. Conducted over a two week period, the Takedown resulted in charges being brought against 455 defendants, including 90 doctors and other licensed medical professionals, for their alleged participation in health care fraud and opioid abuse schemes involving over $6.5 billion in false claims and significant patient harm, including death.
While many of the alleged fraud schemes involved issues we have seen many times before such amniotic wound allograft fraud schemes and illegal opioid distribution, not to be overlooked within the overall numbers is a historic shift in federal enforcement priorities – the Takedown included the largest number of Medicaid fraud defendants and the largest Medicaid fraud loss charged in Department history: 295 defendants and over $518 million in allegedly false claims submitted to Medicaid.
That milestone did not emerge by accident. It reflects a deliberate reorientation of federal resources toward a program that has, until recently, been largely left to states to police. One illustrative case captures this fact: the Takedown included the first prosecution arising from the Health Care Fraud Unit’s Financial Intelligence Review Team — formed last year to combine traditional data analytics with financial analysis — in connection with a $67-$75 million scheme to bill Illinois Medicaid for behavioral health services that were allegedly not provided. The owner of a methadone clinic in Illinois allegedly orchestrated a scheme that allegedly resulted in the submission of claims for 500 or more hours of counseling and therapy services per day, well in excess of what providers on staff could render even working 24 hours per day. According to the criminal complaint, the owner allegedly directed others to create fake medical records and bill for services not provided, including for beneficiaries who had died. The Health Care Fraud Unit’s specialized prosecutors opened the investigation within five days of the financial intelligence review, and the defendant was arrested less than seven months later at the airport attempting to leave the country.
Letters to State AGs.
The Takedown’s Medicaid focus did not arise in a vacuum. It is part of a coordinated federal campaign that began months earlier with a direct challenge to state-level enforcement. On May 13, 2026, Inspector General T. March Bell sent a letter to the Attorneys General of every state warning that the federal government would impose strict compliance requirements on each state’s MFCU if, as the letters recite, certain MFCUs continue to “rake in taxpayer dollars without fighting fraud.” Reminding Attorneys General that Congress adopted statutes and HHS adopted regulations that establish requirements for MFCUs that receive taxpayer money, the letters state that MFCUs are expected to “fight fraud as vigorously as [they] can.” The letters represent a significant escalation in federal oversight of state-level Medicaid fraud enforcement, arriving in the context of the Administration’s Task Force to Eliminate Fraud, led by Vice President Vance, which, as noted in the Takedown’s Press Release, is coordinating a “whole-of-government strategy” to combat fraud across federal programs.
The Inspector General’s letters did not mince words. The letters stated that the OIG will “engage in a robust review” of every state’s MFCU, and outlines an array of potential regulatory consequences for units that fail to meet statutory requirements, including: (1) implementation of a corrective action plan or other special conditions on annual recertification; (2) reduction or suspension of MFCU funding; or (3) denial of recertification, which could result in the loss of all federal grant funds provided to the state’s Medicaid program. The backdrop against which the letters were sent matters. According to HHS-OIG’s FY 2025 MFCU Annual Report, the 53 MFCUs collectively reported 1,185 convictions and recovered $4.64 for every dollar spent, with combined criminal and civil recoveries totaling almost $2 billion. Notwithstanding those aggregate results, the IG’s framing signaled that such performance levels would no longer be acceptable.
Decertification & Defunding: Hawaii.
Three weeks after the May 13 letters were sent, the federal government demonstrated it was not bluffing. On June 4, 2026, the OIG followed through with its threats by formally denying recertification of Hawaii’s MFCU based on its failure to pursue Medicaid fraud. The OIG’s stated rationale was specific and jarring: Between 2022 and 2025, the MFCU had “not a single Medicaid fraud indictment or conviction, despite receiving approximately 12 million Federal tax dollars to fight Medicaid fraud during that period.” (Italics in the original.) The OIG specifically faulted the MFCU for failing to investigate and prosecute patient abuse and neglect in Medicaid-funded facilities as required by statute, and found the unit’s overall enforcement outcomes and financial recoveries to be minimal relative to the size and growth of Hawaii’s Medicaid program. As a result of the denial of recertification, Hawaii faces a loss of approximately $3 million in annual federal funding (although it may request reconsideration).
Minnesota & California.
But Hawaii is not the first state to feel the sting of the withholding of federal funds. Earlier this year, both Minnesota and California have had such funding withheld due to program integrity issues identified by the federal government. CMS’review of Minnesota’s Medicaid spending for the fourth quarter in FY 2025, for example, resulted in a deferral of $259,505,491 in federal matching funds. This includes state expenditures of $243.8 million for “unsupported or potentially fraudulent Medicaid claims” and $15.4 million related to claims involving “individuals lacking a satisfactory immigration status.” In announcing these actions, CMS noted that it utilized both traditional financial management approaches and new program integrity oversight strategies to identify unusually high spending and rapid growth in certain service areas, including, personal care services, home and community-based services, and other practitioner services. The consequences for Minnesota could be dire if it fails to address the noted issues in its second attempt to submit a corrective action plan (the first corrective action plan was rejected by CMS). If the second corrective action plan is also rejected by CMS, not only would the $350 million in federal funds remain frozen, but CMS warned “should Minnesota fail to clean up its significant program integrity vulnerabilities or demonstrate that the expenditures are allowable, CMS may defer more than $1 billion in federal funds over the next year.”
California, too, has had a significant amount of federal funds deferred. In January of this year, CMS sent Governor Newsom a letter requesting detailed information regarding program integrity, eligibility verification, and provider oversight within California’s Medi-Cal program. The letter specifically identified concerns with home health care and managed care plan fraud. Then in May, CMS advised the State Medicaid Director that over $1.1 billion in federal funds was being deferred due to the significant growth in and program integrity concerns with personal care services.
Civil Enforcement.
On the civil enforcement front, a new structural change has dramatically compressed the timeline for Medicaid fraud accountability. On May 27, 2026, the DOJ Civil Division announced reforms to accelerate the review of False Claims Act whistleblower complaints alleging fraud against federally funded, state-administered benefits programs. The Civil Division will now prioritize qui tam complaints alleging fraud against public benefits programs by performing its initial review within 60 to 120 days.
The legal authority for the new policy flows from the highest levels of the executive branch. The memorandum is the culmination of a series of enforcement initiatives launched by the Administration in 2026: on January 8, 2026, the White House announced plans to establish a new Assistant Attorney General position with nationwide jurisdiction over fraud enforcement; on March 16, 2026, President Trump issued an Executive Order entitled “Establishing the Task Force to Eliminate Fraud,” creating a White House Task Force chaired by Vice President J.D. Vance; on March 24, 2026, the Senate confirmed Colin McDonald as AAG to lead the new fraud enforcement division; and on April 7, 2026, Acting Attorney General Todd Blanche issued a memorandum formally establishing the National Fraud Enforcement Division (NFED), a new stand-alone DOJ litigating division centralizing supervision of DOJ’s fraud enforcement components.
The practical significance for Medicaid providers is substantial. In prior years, qui tam complaints routinely remained under seal for years — often three to five — while the DOJ evaluated whether to investigate. In the most aggressive reading, a case could now move from filing to an intervention or referral-to-relator decision in as few as 120 days, with a complete government investigation wrapped up within 240 days. For FCA matters, that is extraordinarily fast.
The new policy also creates parallel enforcement exposure from day one. New matters will be promptly referred to the Criminal Division and the National Fraud Enforcement Division for evaluation of potential criminal violations, and to the affected agency for potential administrative action, including payment suspension — before the civil investigation is even complete. This whole-of-government approach means that a single qui tam complaint could simultaneously trigger a civil FCA investigation, a criminal referral, and administrative payment suspension.
The Convergence: What It Means
The 2026 Takedown, the MFCU review campaign, Hawaii’s decertification and other withholds of federal funding, and the Civil Division’s fast-track policy are not independent events. They are interlocking components of a structural transformation in how Medicaid fraud is pursued. For providers, the practical implications are clear: the historical gap between federal enforcement vigor for Medicare versus Medicaid fraud has narrowed sharply.
The strong financial incentive to pursue these programs, combined with other federal anti-fraud initiatives, creates a perfect storm for heightened regulatory and enforcement activity in 2026 and beyond. The regulated community should therefore review the adequacy of existing compliance protocols.
The Takedown itself offered a preview of where federal enforcement is heading: data-driven, fast-moving, internationally coordinated, and — for the first time in the program’s history — making Medicaid fraud a first-tier enforcement priority rather than a residual one.
Hawaii’s decertification is widely viewed in the compliance community as a signal to every other state. The audits of MFCUs may result in an increase in provider enforcement in an effort to show the federal government tangible results. The DOJ has a new National Fraud Enforcement Division and has been highlighting Medicaid fraud enforcement actions almost on a weekly basis.