New Program Seeks Whistleblowers to Combat Health Care Fraud

The government is looking for assistance in dismantling a massive health care fraud scheme estimated to cost billions. On Monday, Treasury Secretary Scott Bessent is set to announce a new initiative that offers rewards of up to 30 percent of the fines levied against those involved in defrauding Medicare and Medicaid.

This initiative comes on the heels of alarming estimates that fraud in these programs could exceed $70 billion each year. So, tipsters could stand to gain quite a bit if they’re willing to step forward.

Bessent’s decision was influenced by a visit to Minnesota in January, where he learned about a notorious scam involving Somali immigrants reportedly defrauding government welfare programs, with an astonishing total of at least $9 billion taken since 2018.

The funds for these rewards will come directly from the fines, keeping costs away from U.S. taxpayers, according to a confidential Treasury document.

“Anyone in the U.S. or abroad that provides actionable information could potentially earn a reward if it leads to a successful enforcement action resulting in fines exceeding $1 million,” one document states.

This program mirrors similar initiatives undertaken by the Internal Revenue Service, also part of the Treasury Department.

In an effort to crack down on this issue, Bessent is warning U.S. banks about sophisticated schemes where fraudsters are allegedly recruiting foreign nationals to exploit federal social programs.

Investigators have found evidence of Somali groups in Minnesota establishing fake autism clinics and other sham services to siphon off taxpayer money, even allegedly funnelling funds to terrorist organizations like al-Shabaab.

“Taxpayers deserve to know their money isn’t being funneled into fraud or terrorism,” a Treasury official shared.

One significant case involved a group named Feeding Our Future, which allegedly misappropriated $250 million intended to feed children.

According to prosecutors, the money was redirected to luxury cars and lavish lifestyles instead of aiding those in need.

A notable aspect of this effort comes following an executive order signed by President Trump in March 2025, which declared a zero-tolerance policy against such fraud.

Vice President J.D. Vance has set up a new task force to address this growing issue, and an advisory is expected to be released to help banks identify suspicious activities linked to health care fraud.

Under current law, banks are required to report any suspected money laundering or fraud activities, which includes filing suspicious activity reports (SARs).

The advisory aims to equip banks with knowledge on how fraudsters often exploit patient identities through bribery and identity theft, submitting false claims for non-existent medical treatments.

The financial gains from these schemes are often funneled overseas, making recovery efforts challenging.

“Fraudulent schemes like these are among the most substantial sources of illegal revenue in the U.S.,” the upcoming memo notes, adding that incidents of health care fraud have surged since the COVID-19 pandemic.

The document warns that failing to tackle these fraudulent claims could ultimately burden taxpayers, stressing that these practices compromise the integrity of the healthcare system and increase costs.

Fraud starts with “straw owners,” often using stolen identities to create fake health care companies that claim to provide legitimate services such as lab tests or home care.

These operations frequently charge for services that were never rendered and engage in upcoding procedures to inflate costs.

Once payments are made by the government, these funds are quickly moved overseas, complicating recoup efforts.

Last year, the Justice Department brought charges against 324 individuals linked to a $10 billion health care fraud scheme, marking it as one of the largest prosecutions of its kind.

In addition, a 2022 study estimated that the annual losses from Medicaid and Medicare fraud reach at least $68.7 billion.

The upcoming Treasury advisory outlines 24 warning signs that banks should look for, such as unusual claim spikes from newly formed healthcare firms and large money transfers overseas soon after government payments are processed.

While not legally binding, ignoring these recommendations can pose serious risks to banks, leading to scrutiny and potential penalties.

Just weeks ago, the Treasury hit a New York-based bank with an unprecedented $80 million penalty for failing to monitor suspicious activities adequately.

The case involved more than 160 undetected suspicious activity reports related to various dubious transactions, although they were not directly tied to health care fraud.