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Friday, October 2 · 8 stories
- Legal
Independence Blue Cross Pays $22.5M to Settle MA Fraud Claims
Independence Blue Cross agreed to pay $22.5 million to resolve allegations that it inflated diagnosis codes for Medicare Advantage beneficiaries to boost risk-adjustment payments. The insurer described the settlement, along with similar resolutions by other payers, as reflecting "industry-wide challenges" in applying Medicare Advantage risk adjustment standards. The matter concerns Medicare Advantage rather than Medicaid managed care directly, though risk adjustment practices and enforcement scrutiny often extend across both program types for payers operating in both markets.
- Legal · AZ
Arizona AG Sues Express Scripts, Optum Over Opioid Role
Arizona Attorney General Kris Mayes filed a consumer fraud lawsuit Oct. 1 against pharmacy benefit managers Express Scripts and Optum, alleging their formulary and rebate practices fueled the state's opioid epidemic over more than two decades. The complaint alleges the PBMs gave OxyContin unrestricted preferred formulary status in exchange for confidential payments from Purdue Pharma, avoided prior authorization and step-therapy controls, distributed misleading materials downplaying addiction risk, and sold prescriber data for targeted opioid marketing. Filed under the Arizona Consumer Fraud Act, the suit seeks restitution, civil penalties, injunctive relief, disgorgement and corrective programs. It closely mirrors a similar Arkansas lawsuit filed against the same two PBMs in June 2024, part of a broader wave of state litigation scrutinizing PBM business practices.
- Legal · SC
OIG Finds SC Underreported $108.6M in Medicaid COVID FMAP Collections
HHS OIG found that South Carolina failed to report approximately $108.6 million of the federal share of Medicaid and CHIP collections subject to the temporary increased FMAP authorized during the COVID-19 public health emergency. The finding stems from an audit examining whether the state properly identified and returned collections tied to the enhanced federal match rate. The report affects South Carolina's Medicaid agency, which will likely need to refund the unreported federal share to CMS and correct its reporting processes. The audit underscores broader compliance risk for states that received the temporary FMAP bump and must accurately reconcile collections against the higher match rate.
- Legal · WI
OIG Finds Wisconsin May Have Misclaimed $455M in School Medicaid Funds
The HHS Office of Inspector General reports that Wisconsin may have improperly claimed $455 million in federal Medicaid reimbursement for its school-based services program. The finding affects the state Medicaid agency and school districts that bill Medicaid for services delivered to eligible students, as OIG's audit identifies claims that did not meet federal reimbursement requirements. The report does not specify a comment deadline but signals likely recoupment action and corrective-action requirements from CMS. The audit underscores recurring compliance risk in state school-based Medicaid billing programs nationally.
- Legal
Oracle Health Breach Now Affects 29 Hospital Systems
Becker's Hospital Review reports that 29 hospitals and health systems have confirmed patient data was compromised in a 2025 breach of Oracle Health's legacy Cerner systems, with the intrusion dating back to at least Jan. 22, 2025. Affected organizations include Atrium Health, AdventHealth, Christus Health, Baptist Health South Florida, and LifeBridge Health, among others. Oracle Health reportedly asked healthcare organizations to delay patient notification while the investigation continued, and the vendor now faces legal action over the incident. Health systems are continuing to notify patients as the full scope of affected entities becomes clearer.
- Legal
DOJ Memo Prioritizes Healthcare Fraud in Corporate Investigations
An Oct. 1 memo from Assistant Attorney General Colin McDonald directs the Justice Department's National Fraud Enforcement Division to prioritize healthcare fraud, including controlled substance distribution and FDCA violations, as one of four focus areas for corporate investigations. Prosecutors must weigh 10 factors when deciding on charges or plea agreements, including corporate management's knowledge of schemes, efforts to conceal fraud from government auditors, and conduct causing substantial harm to taxpayer-funded programs. The division, formed in April from the former Criminal Division Health Care Fraud Unit, is using data analytics to accelerate new investigations and will develop whistleblower incentive programs, including for participants in misconduct. The policy also directs prosecutors to follow existing self-disclosure and cooperation credit guidance while avoiding overly broad enforcement.
- Legal · IA
Iowa Attorney Sentenced for Rolls Royce Medicaid Eligibility Fraud Scheme
A federal judge sentenced Iowa attorney Timothy Anderson to six months in prison, a $25,000 fine, and $184,274 in restitution to Iowa Medicaid after he pleaded guilty to making false statements in a healthcare matter. Anderson had helped an elderly couple try to shelter over $400,000 in assets to qualify for Medicaid-funded nursing home care by submitting a falsified vehicle valuation involving his inoperable 1961 Rolls Royce Phantom V. Iowa Medicaid rejected the application, triggering an FBI investigation that led to the criminal charge. The Iowa Supreme Court has also temporarily suspended Anderson's law license following his guilty plea.
- Legal · WA
Judge Lets Some Immigrants Keep Washington Medicaid Coverage
A federal provision in the 2025 tax and spending law stripped Medicaid eligibility for refugees, asylees, trafficking survivors, and other lawfully present immigrants nationwide, cutting roughly 10,000 people in Washington from coverage as of Thursday. A U.S. District Court judge in Seattle issued a preliminary ruling preserving coverage for an estimated 800 of those immigrants who receive Supplemental Security Income, finding federal officials improperly tried to override existing eligibility rules; the government may appeal. State officials separately updated immigration records to save coverage for about 3,000 more people, reducing original loss projections from 14,000. Washington's governor has issued an executive order to track coverage losses and explore state funding options, while advocates push for state dollars to cover the gap.
Thursday, October 1 · 7 stories
- Legal
Court Strips Integration Mandate From Section 504 Rules
A federal judge in Texas v. Kennedy agreed to remove "most integrated setting" language from Section 504 regulations after the Justice Department, originally the defendant, switched sides to side with states challenging the rule. The reversal follows a June DOJ opinion disavowing the integration requirement and a July announcement that DOJ would stop relying on its enforcement guidance. Disability rights advocates say the ruling does not undo ADA or Olmstead protections but creates legal ambiguity that could let states scale back community-based services, particularly as states face pressure to cut Medicaid spending. Advocacy groups are now backing legislation to codify integration protections and working with states directly to strengthen disability laws.
- Legal
Law Firm Assesses Six Months of CMS Home Health Enrollment Moratorium
In a client alert, Arnall Golden Gregory LLP reviews the first six months of CMS's enrollment moratorium on home health and hospice agencies, imposed in May 2026 under the agency's CRUSH anti-fraud initiative. The firm examines how the moratorium has affected provider enrollment, M&A transactions, and agency growth in the sector, addressing industry concerns raised when the policy was first announced. The analysis covers practical impacts on providers and investors navigating the enrollment freeze. No new CMS action is reported; the piece is a retrospective legal analysis of an existing policy.
- Legal · WI
Judge Strikes Down Trump Rule Requiring Immigration Checks for Federal Services
A federal judge ruled Sept. 21 that the Trump administration's 2025 rule requiring immigration status checks for users of federally funded adult education, Head Start, and community health centers violated notice-and-comment requirements. The rule would have barred undocumented immigrants and several legal-status categories, including TPS holders and U visa applicants, from these programs, reversing a three-decade interpretation that such safety-net services were open to all regardless of immigration status. Wisconsin and 20 other states had sued to block the rule, arguing it would force states to restructure social safety nets and render them inaccessible to vulnerable residents. The ruling permanently blocks enforcement of this version of the rule, though federal agencies could reissue it after proper notice and comment.
- Legal · IA
Former Public Defender Sentenced for Medicaid Fraud Scheme
A former public defender and Iowa-licensed attorney, Cassi Wigington, has been sentenced to five months in prison for healthcare fraud. A federal grand jury in Nebraska charged her in June after prosecutors alleged that, beginning in 2012, she fraudulently sold medical equipment including custom-made breast prosthetic devices to cancer patients and billed Medicaid for the scheme. The case was prosecuted in federal court, and the sentencing closes out the criminal proceedings against her.
- Legal · FL
Florida House Democrats Ask IRS to Probe Hope Florida Funds
Florida House Democratic Leader Fentrice Driskell and Rep. Kelly Skidmore sent a letter asking the IRS to investigate whether the Hope Florida Foundation and two affiliated nonprofits properly reported, and owe taxes on, $10 million that originated from a Medicaid managed care overbilling settlement. A Leon County grand jury found the funds were misappropriated and routed through two 501(c)(4) organizations to a political committee and ultimately the Republican Party of Florida to oppose a 2024 marijuana legalization ballot measure, though it found insufficient evidence to bring criminal charges. Democrats argue the transfers violated nonprofit political-activity restrictions and are asking the IRS to assess back taxes and penalties. The request follows the August leak of the grand jury's 19-page report and seeks federal accountability after state prosecutors declined to pursue charges.
- Legal · MA
RegalCare Nursing Home Execs Pay $1M Over Billing Claims
Massachusetts nursing home operator RegalCare Management Group, along with owner Eliyahu Mirlis and executive Hector Caraballo, agreed to pay $1 million to resolve allegations that they submitted false claims to Medicare and Medicaid for medically unnecessary rehabilitation therapy. Federal prosecutors said the conduct occurred between 2018 and 2023. The settlement resolves the billing allegations against the company and the two named executives.
- Legal · MA
Autism Provider Sues Massachusetts to Block MassHealth Recoupment
An autism therapy provider affiliated with LEARN Behavioral has filed suit against 10 Massachusetts public officials and entities to stop MassHealth's effort to recoup millions of dollars from autism therapy providers for services delivered in 2024. Providers have publicly criticized the recoupment effort as flawed since the spring, and the lawsuit seeks to halt the clawback before it proceeds further. The case centers on disputes over billing or payment methodology used to calculate the recoupment amounts. The outcome could affect how MassHealth and other state Medicaid programs pursue retrospective recoupments against behavioral health providers.
Wednesday, September 30 · 3 stories
- Legal · NY
HHS-OIG Denies Recertification of New York's Medicaid Fraud Unit
In a client alert, Harris Beach Murtha reports that HHS-OIG has denied recertification of New York's Medicaid Fraud Control Unit and suspended a substantial share of its federal grant funding, with a corrective action deadline of September 30, 2026. The firm notes this coincides with increased use of AI-driven claims analytics to flag potential fraud, creating heightened enforcement risk for New York Medicaid providers. The alert advises providers to review billing practices and compliance programs in light of both developments. No specific new enforcement action against individual providers is described beyond the MFCU funding suspension itself.
- Legal · CO
CWS Colorado Director Urges Congress Restore Refugee Medicaid Eligibility
In a Colorado Newsline commentary, Kristy Beachy-Quick of CWS (Church World Service) argues that federal law revoking Medicaid eligibility for refugees, asylees, humanitarian parolees, and trafficking survivors will harm vulnerable Coloradans starting October 1, 2026. She cites the 2025 federal reconciliation law (H.R.1) as eliminating this coverage for roughly 7,000 Coloradans, leaving chronic conditions untreated and shifting costs to hospitals, food banks, and nonprofits. The author contends refugees contribute significantly in taxes and economic activity, citing state estimates of $127.1 million in state/local taxes and $233.3 million in federal taxes paid by Colorado refugees in 2023. She calls on Congress to restore Medicaid eligibility for these humanitarian populations.
- Legal · NC
Whistleblowers Allege NC Officials Falsified Medicaid Tech Funding Bids
A newly unsealed federal lawsuit alleges former North Carolina health officials submitted false information to secure federal funding for a Medicaid technology overhaul, and that federal regulators approved the funding despite warning signs. Former state employees serving as whistleblowers brought the claims, which implicate both state Medicaid leadership and the federal approval process. The lawsuit was previously dismissed but the whistleblowers may seek to revive it. The case raises questions about oversight of federal matching funds for state Medicaid IT modernization projects.
Tuesday, September 29 · 3 stories
- Legal · MD
UMMS Settles With Maryland AG Over Facility Fee Billing
University of Maryland Medical System agreed to pay more than $2.25 million in restitution to patients to resolve a dispute with the Maryland attorney general's office over outpatient facility fees. The settlement covers facility fees charged between January 1, 2017 and June 30, 2021, and was signed in September. Affected patients who were billed these fees during the covered period will receive refunds under the agreement. The case highlights continued regulatory scrutiny of hospital facility fee billing practices that affect commercially insured and government payer patients alike.
- Legal
UnitedHealthcare, TeamHealth Settle $100M Upcoding Lawsuit
UnitedHealthcare and TeamHealth voluntarily dismissed with prejudice a lawsuit in which the insurer had accused the physician staffing company of upcoding emergency department claims. The dismissal, filed September 24 in Tennessee federal court, followed the parties notifying the court on August 11 that they had reached a settlement. Terms of the settlement were not disclosed in available court records. While the case involved commercial claims rather than Medicaid specifically, the underlying upcoding allegations against a major ED staffing firm are relevant to program integrity efforts across payers, including Medicaid managed care plans that contract with or reimburse similar staffing arrangements.