A network of foreign operatives, communicating through encrypted messaging and using assumed identities, sent representatives into the United States with a specific assignment: buy as many medical supply companies as possible, as quickly as possible, and start billing Medicare. Over the course of the scheme, the organization acquired dozens of suppliers across the country and submitted more than $10.6 billion in fraudulent claims for urinary catheters and other durable medical equipment, using the stolen identities and confidential medical information of more than one million Americans to do it.
The DOJ’s data analytics team detected the anomalous billing patterns before most of the money moved, blocking all but approximately $41 million of the $4.45 billion Medicare had scheduled to pay out. The scheme still resulted in roughly $900 million in payments from supplemental insurers. In June 2025, 29 defendants were charged as part of what the DOJ called the largest loss amount ever charged in a single healthcare fraud case, as part of a broader national takedown that charged 324 individuals across 50 federal districts for schemes totaling more than $14.6 billion in alleged fraud.
The case, known as Operation Gold Rush, is extreme in scale, but the underlying dynamic it reflects is not.
Why DME Is So Vulnerable to Fraud
Durable medical equipment covers a wide range of products covered by Medicare: wheelchairs, walkers, hospital beds, oxygen equipment, CPAP machines, urinary catheters, orthotic braces, and more. Medicare reimburses suppliers directly for equipment prescribed by a physician and delivered to a beneficiary. Because the program relies on documentation supplied by the provider and supplier, and because the delivery of equipment to a patient’s home is difficult to verify after the fact, DME billing has long attracted fraudulent actors.
The vulnerability is compounded by the structure of the supplier market. DME suppliers can be quickly established and registered with Medicare, and begin billing almost immediately. Fraudulent operators have used this window repeatedly, submitting large volumes of claims before the government’s detection systems catch up, and then closing or transferring the company when scrutiny increases. The Operation Gold Rush defendants allegedly used foreign straw owners and encrypted messaging to disguise their control of dozens of shell supplier companies, cycling through corporate structures as the scheme scaled.
Possible DME Fraud Whistleblowers
DME fraud schemes, even highly sophisticated ones, depend on the cooperation or silence of people who have direct knowledge of how they operate. Individuals who may have relevant information include:
- Supplier employees who are aware that claims are being submitted on behalf of patients who never received the equipment, or for equipment that was never ordered by a physician
- Sales and marketing staff who have participated in or witnessed payments to physicians or telemedicine companies in exchange for prescriptions
- Drivers and delivery personnel who know that delivery records do not match what was delivered
- Billing staff who recognize that codes submitted reflect a more expensive item than was actually provided
- Physicians who have been approached by suppliers offering payments in exchange for signing prescriptions without an adequate patient evaluation
A whistleblower with direct knowledge of any of these practices may have the basis for a qui tam lawsuit under the False Claims Act, allowing them to file on behalf of the government and receive a portion of any recovery.
Common DME Fraud Schemes
DME fraud cases prosecuted under the False Claims Act tend to have several recurring patterns:
- Billing for equipment that was never ordered by a physician, never delivered to a patient, or never wanted or needed by the beneficiary. In Operation Gold Rush, Medicare beneficiaries received statements showing that thousands of dollars in equipment had been billed under their names without their knowledge.
- Using stolen patient identities or purchasing beneficiary data to submit claims for people who had no relationship with the supplier and no medical need for the equipment billed.
- Paying kickbacks to physicians or telemedicine operators in exchange for signed prescriptions, with the physician providing little or no actual evaluation of the patient’s need. In April 2025, the operators of Empire Pain Center in New Jersey faced prison sentences and agreed to pay $63.8 million to resolve allegations they billed Medicare for medically unnecessary body braces and exchanged kickbacks with telemedicine companies that supplied the prescriptions.
- Upcoding equipment to a more expensive or complex item than was provided, or billing for power wheelchairs when a standard model was delivered.
- Continuing to bill for equipment that a patient no longer uses or has returned.
The False Claims Act’s Role in DME Enforcement
Each claim submitted to Medicare for DME includes a certification that the equipment was medically necessary, ordered by a qualified physician, and provided to the beneficiary. If any of those representations are false, the claim violates the False Claims Act. The government can recover up to three times the amount improperly paid, with additional per-claim penalties. In cases involving high-volume billing schemes, the government’s damages can be significant.
The government has also invested heavily in data analytics to detect DME fraud before it is paid. The detection of Operation Gold Rush’s anomalous billing patterns, which prevented nearly all the $4.45 billion in scheduled Medicare payments from going out, was the product of the DOJ’s Health Care Fraud Unit data analytics team working alongside HHS-OIG and CMS. That capability is expanding, with the DOJ announcing in connection with the 2025 takedown that it was creating a new Health Care Fraud Data Fusion Center to leverage cloud computing, artificial intelligence, and advanced data analytics to detect emerging fraud patterns across federal healthcare programs.
Speak With a Whistleblower Attorney
If you have knowledge of a DME supplier billing Medicare for equipment that was not ordered, not delivered, or obtained through a kickback arrangement, you may have information the government needs. A whistleblower attorney at Keller Grover can evaluate your situation and advise you on your options under the False Claims Act. Contact our legal team today to discuss what you know and what steps you can take to come forward.