The Hidden Business of Healthcare Fraud Rings

You might picture organized crime as something out of The Sopranos — drug deals, stolen cars, or money laundering. But what if we told you that one of the biggest criminal enterprises today is hiding behind lab coats, prescription pads, and billing codes? Healthcare fraud rings are some of the most overlooked forms of white-collar crime, infiltrating both public and private insurance. They’re not just ripping off Medicare, they’re laundering money and leaving behind claims that initially look legit.

If you’re a claims adjuster, SIU investigator, or fraud manager, these are the cases you need to know. Because these rings are built like businesses — and they’re getting smarter.

What are Healthcare Fraud Rings?

Think of a healthcare fraud ring like an organized heist crew. It’s not just one person running a scam — it’s a network of specialists, each playing a part to pull off a complex, coordinated operation that steals from healthcare programs and insurers on a massive scale.

These rings often include:

• Physicians—some fully complicit, billing for services never rendered, others unknowingly lending their credentials.
• Clinic Owners—usually the masterminds setting up real or fake facilities to funnel patients and bill for unnecessary procedures.
• Patient Brokers—recruiters who bring in vulnerable individuals — often low-income, seniors, or homeless — promising small rewards like $50 gift cards in exchange for “signing in” at clinics.
• Labs and Pharmacies—processing unnecessary tests or dispensing expensive drugs to pay the bills.
• Middlemen—money launderers, equipment supplies, and paper-pushers who keep the scheme running and the trails covered.

The Coalition Against Insurance Fraud notes that healthcare fraud rings are among the most expensive and hardest to detect because of their precision and scale.

Real Cases, Real Lessons

Nationwide Takedown (2024— $2.75 billion)

In June 2024, the Department of Justice charged 193 people, including 76 doctors, in a sweep across 32 states. The perpetrators used telehealth platforms and shell companies to run wound care scams, genetic testing mills, and durable medical equipment (DME) ghost factories. Over $1.6 billion was already paid out before fraud was uncovered.

Just because something looks like a legitimate provider doesn’t mean it’s not a ring. Look for claim clustering across locations and identical high-cost services.

Arizona Wound Care Scheme (2024— $1.2 billion)

A couple in Phoenix pleaded guilty to submitting over $1.2 billion in fraudulent Medicare claims for unnecessary amniotic wound grafts on elderly patients.

If expensive treatments are being used on injuries that don’t warrant them, especially on repeat, you may be seeing staged care for billing purposes.

Florida Telemedicine & DME Fraud (2022— $1.2 billion)

In Miami, call centers targeted seniors with offers of “free medical equipment.” Doctors, often working through telehealth, signed off on prescriptions for back and knee braces—sometimes without ever speaking to the patient.
The claims were then submitted to Medicare through a network of DME companies, many of which were secretly connected through shared ownership and kickbacks.

If you start seeing large volumes of braces or equipment, especially tied to the same provider or telehealth group, it’s a red flag worth investigating.

Illinois COVID Testing Scam (2025— $227 million)

In Chicago, two men created labs under fake owners and billed Medicare for tests that were never performed. Kits weren’t shipped. Results weren’t issued. But the claims? Rolling in.

They exploited emergency billing rules and flooded the system. Be cautious with new providers that pop up quickly and scale fast, especially those with vague lab documentation or inconsistent volume patterns.

New York City HIV Drug Diversion Ring (2024— $20 million)

In New York City, a pharmacist bought already-dispensed HIV meds off the black market… then billed insurers as if they were new. He used fake pharmacies, shady distributors, and shell companies to launder profits.

This wasn’t just a fraud risk — it was a patient safety issue. Be wary of repeated high-cost scripts with poor inventory controls or suspicious refill timelines. Drug diversion often leaves a trace.

What Makes These Rings So Hard to Catch?

Many of these cases don’t always look like fraud, until you zoom out. Patterns are often the giveaway:

• Repeated CPT codes across locations
• Identical treatments for unrelated patients
• Patients traveling long distances for routine care
• Sudden spikes in billing from new or unknown clinics

That’s why many carriers are leaning on AI-driven platforms to cluster provider behavior and spot anomalies early. But tech is only half the battle, it’s also important that claims professionals know what to watch for.

Want to Stay Ahead of Healthcare Fraud Rings?

Start here:

• Flag providers using the same codes, same devices, or same test types across patient populations
• Map geographic outliers — are patients driving hours for “routine” care?
• Work with SIU early when trends emerge
• Educate claims teams on how brokering works behind the scenes

The better we understand the structure of these rings, the faster we can break them apart.

Want to learn more about healthcare fraud rings? Talk to us today. 

Check out our sources:

Coalition Against Insurance Fraud. Fraud Statistics & Trends. Coalition Against Insurance Fraud, 2024, https://insurancefraud.org/fraud-stats/.

United States Department of Justice. “Arizona Couple Pleads Guilty to $1.2 Billion Health Care Fraud Scheme.” Justice.gov, 20 Mar. 2024, https://www.justice.gov/opa/pr/arizona-couple-pleads-guilty-12b-health-care-fraud.

United States Department of Justice. “Florida Telemedicine Company Executives and Medical Professionals Charged in $1.2 Billion Medicare Fraud Scheme.” Justice.gov, 28 Apr. 2022, https://www.justice.gov/opa/pr/florida-telemedicine-company-executives-and-medical-professionals-charged-12-billion.

United States Department of Justice. “National Health Care Fraud Enforcement Action Results in Charges Against 193 Individuals for $2.75 Billion in False Billings.” Justice.gov, 27 June 2024, https://www.justice.gov/archives/opa/pr/national-health-care-fraud-enforcement-action-results-193-defendants-charged-and-over-275-0.

United States Department of Justice. “New York Pharmacist Sentenced for $20 Million HIV Medication Diversion Scheme.” Justice.gov, 5 Jan. 2024, https://www.justice.gov/usao-sdny/pr/new-york-pharmacist-sentenced-20-million-hiv-medication-diversion-scheme.

United States Department of Justice. “Owners of COVID-19 Testing Labs Charged for $227 Million Medicare Fraud Scheme.” Justice.gov, 10 Jan. 2025, https://www.justice.gov/opa/pr/owners-covid-19-testing-labs-charged-227-million-medicare-fraud-scheme.