We now live in a world where technology, especially artificial intelligence, permeates most of our daily lives. So it should come as no surprise that the business of fraud is experiencing the same tech-inundation. The perpetrators of fraud, the government investigators of fraud, and the whistleblower watchdogs who report fraud have all taken up the tools of AI. In the coming years, it will be critically important for law enforcement to master those tools before criminals can do the same. There are some hopeful signs that the government and whistleblowers are ahead of the coming AI-fueled crime wave, but time is short.
Last year the Justice Department announced the results of a broad law enforcement program known as the National Health Care Fraud Takedown, which included as one component “Operation Gold Rush.” Gold Rush uncovered a worldwide scheme by a “Transnational Criminal Organization,” using straw purchasers from Russia and Estonia, to acquire thirty medical supply companies holding existing Medicare contracts. They proceeded to turn those companies into conduits of fraud, submitting over $10 billion in phony claims for Medicare payments and collecting nearly $1 billion before the scheme was stopped. Nineteen defendants were charged with these crimes, with four arrested in Estonia and eight more arrested trying to flee the United States.
Reportedly, the Government used sophisticated technology, including AI, to uncover and investigate the scheme. The Government has wisely chosen not to publicize their techniques, but it is encouraging that the Justice Department has recognized the importance of using modern technology tools to take down modern fraudulent schemes.
Last year the Justice Department announced a new initiative that should make further use of cutting-edge technology to uncover and prosecute criminal fraud enterprises. In August, the Department touted the creation of the West Coast Health Care Fraud Task Force, which will focus on fraud in Silicon Vally, among other locations. According to one article, “Experts think the new strike force reflects the federal government’s broader effort to adapt its fraud enforcement to industries that are becoming more data-driven and tech-enabled each day.” As Whistleblower Partners explained in a post on the new task force, this represents “a major escalation in enforcement efforts — particularly around technology-driven fraud schemes, telehealth, Medicare and Medicaid fraud, and other data-driven investigations.”
The Government’s effort is noteworthy and signals concrete steps to get in front of the coming technological crime boom. But that effort is not enough.
The lightning pace of AI development could easily swamp Government enforcement efforts, but whistleblowers have been moving aggressively to try to supplement Government resources. There is no substitute for a well-placed insider who comes forward to reveal the inner workings of a crooked enterprise. But “data miner” whistleblowers are increasingly using advanced AI technology to uncover fraud, despite never having set foot inside the target company.
Tech savvy whistleblowers are developing fraud-sniffing “models” at a furious pace, models that use AI to ingest massive amounts of publicly available data to detect patterns of fraud. One of the pioneers in this space is Integra Med Analytics, a company that years ago filed a series of cases based solely on the results of its AI fraud detection model. A couple of those cases were thrown out by the courts, but one has survived and the government has joined it. The case remains pending. A similar data-driven case brought by data miner Lincoln Analytics recently settled for $6.7 million. We can expect more such cases in the near future.
A few weeks ago the Government, recognizing the rising tide and potential promise of these outsider-whistleblowers, announced its Fraud Oversight through Careful Use of Statistics (“FOCUS”) Initiative. It welcomed data miners to file qui tam whistleblower cases based solely on statistical models, as long as the models were reliable. As we have pointed out elsewhere, there were dual messages delivered by the announcement – the Government encouraged high-quality data miner submissions but discouraged poorly supported, speculative allegations. The Government wants to spend less time separating wheat from chaff and is looking to whistleblowers and their counsel to perform that function.
High tech Government and whistleblower enforcement and oversight are timely developments, as the first wave of cyber-juiced crime is already flowing through our economy. Profit maximizing private companies have aggressively moved to exploit AI’s efficiency, skating close to and sometimes well past legal and ethical lines.
In the past two years the Justice Department announced several settlements of AI-fueled fraud schemes totaling nearly $70 million. (UCHealth pays $23 million (2024); Troy Health pays $1.4 million (2025); Vohra Wound Physicians pays $45 million (2025)). Those numbers will surely increase with the rapid advances in AI that we see every day.
Private enforcement is also increasing. Several health insurers have been sued for allowing AI to deny coverage to patients without meaningful human oversight. So far, those cases have been dismissed on technical grounds, including that Medicare rules preempted private enforcement. E.g., Est. of Lokken, et al. v. UnitedHealth Grp. But those Medicare rules have failed to keep pace with the mis-use of AI to make coverage determinations. We all hope that Medicare catches up quickly.
Whistleblower Partners believes the next AI-driven fraud may emerge in the area of illegal risk adjustment practices. Insurers enrolled in the Medicare Advantage program are paid greater amounts depending on how sick a Medicare patient is. A flood of risk adjustment fraud cases has recovered hundreds of millions of dollars from insurance companies who exaggerate patients’ health conditions and collect extra money from Medicare. It is likely that AI will supercharge such fraud. Unscrupulous insurers could use AI to comb thousands of patient charts, with lightning speed at minimal cost, to “find” diagnoses that doctors did not record. Insurers would use those extra diagnoses to flood Medicare with demands for increased payment. The attorneys at Whistleblower Partners, who have more experience with risk adjustment fraud cases than any other firm in the country, have seen the non-AI version of this fraud many times. Use of AI could supercharge these illegal practices.
Whistleblower Partners has received many data miner proposals in recent months and we vet them carefully. That experience coupled with our decades of successful whistleblower cases makes Whistleblower Partners well equipped to stay ahead of the AI-fueled fraud wave and separate effective from ineffective fraud detection models.
If you have information about fraud involving government money, whether you’re an insider or a data-miner, please contact our whistleblower attorneys for a confidential review.
