Durable Medical Equipment Fraud Defense
Former DOJ Fraud Section Prosecutors. Nationwide Defense for DME Suppliers, Owners, Executives, Physicians, and Marketers Facing Federal Durable Medical Equipment Fraud Investigations and Charges.
Based in Washington, D.C., Armstrong & Bradylyons PLLC defends DME suppliers, company owners, executives, ordering physicians, sales representatives, marketers, and other individuals in federal durable medical equipment fraud investigations and cases nationwide.
Durable medical equipment sits at the center of federal healthcare fraud enforcement right now. On June 23, 2026, the Justice Department announced the 2026 National Health Care Fraud Takedown, the largest coordinated healthcare fraud enforcement action in the Department’s history. DME schemes were among its centerpiece cases, including an additional $3.7 billion in charged claims for urinary catheters and other equipment that was never provided. Federal prosecutors are not slowing down. They are scaling up.
The firm’s healthcare fraud defense practice is built on nearly a decade of combined experience at the nation’s preeminent healthcare fraud enforcement unit: the Healthcare Fraud Unit of DOJ’s Fraud Section. That unit now operates under DOJ’s National Fraud Enforcement Division and leads the annual national healthcare fraud takedowns. Scott Armstrong, Drew Bradylyons, and Andrea Savdie tried 17 federal jury trials in healthcare fraud cases at that unit involving over $2.8 billion in alleged false and fraudulent claims to federal healthcare programs.
That experience includes DME fraud at the charging level. At DOJ, the firm’s attorneys served as lead counsel in a $60 million scheme involving fraudulent claims to Medicare for durable medical equipment that was medically unnecessary and procured through kickbacks and bribes. They also oversaw and coordinated a nationwide enforcement action involving durable medical equipment prescribed through telehealth, involving over $100 million in claims to federal healthcare programs.
Those two matters map directly onto the theories the government advances in nearly every DME case it charges today. Medical necessity. Remuneration for signed orders. The use of telemedicine platforms to manufacture those orders at volume. The firm has litigated each of them from the government’s side of the table.
The firm uses that experience to defend DME suppliers and their owners, executives, and employees at every stage of a federal case: from the first audit, payment suspension, or grand jury subpoena, through federal indictment, and at trial.
The firm defends individuals in the districts where DME fraud enforcement is most active, including Strike Force districts in the Southern District of Florida, the Eastern District of New York, the Northern District of Illinois, the Central District of California, the Southern District of Texas, the District of New Jersey, and the Eastern District of Michigan. The 2026 Takedown reached 56 federal districts across 45 states and territories. Exposure is no longer confined to the traditional Strike Force map.
Armstrong & Bradylyons PLLC defends every DME fraud case from the start as if it will go to trial. That is not a slogan. It is the operating principle of the firm, grounded in 25 federal jury trials in complex fraud cases in federal courts across the country.
Trial experience drives results at every stage. DME fraud cases are factually dense and data-driven. They involve complex billing records, ordering patterns, supplier enrollment documentation, marketing agreements, and allegations that equipment was not delivered, not medically necessary, or procured through kickbacks. The firm builds the factual record from the first day of engagement: analyzing claims data, retaining medical experts, identifying and preparing witnesses, and developing a case theory that can withstand the government’s scrutiny.
The firm’s attorneys know how federal prosecutors build healthcare fraud cases because they built them. Scott Armstrong served for nearly a decade at DOJ’s Fraud Section, where he served as lead trial counsel in 16 federal jury trials, including complex healthcare fraud cases involving Medicare, Medicaid, and Tricare. Scott also directed DOJ’s Appalachian Regional Prescription Drug Task Force. Drew Bradylyons served as Chief of EDVA’s Financial Crimes and Public Corruption Unit and, before that, supervised the Healthcare Fraud Unit’s Miami Strike Force at DOJ’s Fraud Section. That combined experience provides the firm with an unmatched understanding of how federal healthcare fraud cases are investigated, charged, and tried.
The firm relishes the opportunity to try cases. Its willingness to go to trial and its proven skills at trial provide significant leverage in negotiations with federal prosecutors at every stage of a DME fraud case.
Durable medical equipment fraud is one of the longest-running categories of federal healthcare fraud enforcement. In 2026 it became one of the most aggressively prosecuted. DOJ, CMS, and HHS-OIG have taken actions against DME suppliers and their operators that have no precedent in scale, speed, or coordination.
The 2026 National Health Care Fraud Takedown
On June 23, 2026, the Justice Department announced the 2026 National Health Care Fraud Takedown. The government charged 455 defendants, including 90 doctors and other licensed medical professionals, in schemes involving over $6.5 billion in alleged false claims. The cases span 56 federal districts across 45 states and territories. Fifty state Medicaid Fraud Control Units participated, the most in Department history. The government seized more than $182 million in cash, luxury vehicles, jewelry, and other assets. It is the largest coordinated healthcare fraud enforcement action DOJ has ever announced.
DME was central to it. In the Southern District of Florida, a defendant was charged in connection with an additional $3.7 billion in false claims for urinary catheters and other durable medical equipment that was never provided. He fled the country, was apprehended in Kyrenia, and made his initial appearance in the Southern District of Florida. Five additional defendants were charged in the same scheme. Two members of the organization charged in the 2025 Takedown were apprehended in Estonia, extradited, and appeared in the Eastern District of New York on June 12, 2026. These charges are the continuation of Operation Gold Rush, not its conclusion.
The government also demonstrated that flight is not an exit. On June 4, 2026, the FBI created its Most Wanted Fraudsters List. It included a fugitive charged in a $1.2 billion telemedicine and durable medical equipment scheme. He was apprehended in the Philippines four days later and indicted on June 16, 2026, in the District of South Carolina on three counts of failure to appear. DOJ credited the governments of Estonia, the Philippines, and Turkey for their cooperation.
DOJ Has Restructured Around Fraud Enforcement
On April 7, 2026, the Acting Attorney General established the National Fraud Enforcement Division, a standalone litigating division dedicated to fraud against taxpayer-funded programs. The Criminal Division’s Health Care Fraud Unit, Tax Section, and Market, Government, and Consumer Fraud Unit were placed under its operational control effective immediately. The Division supports Executive Order 14395 and the White House Task Force to Eliminate Fraud. The 2026 Takedown was its first major public healthcare fraud action.
The Health Care Strike Force program now operates nine strike forces in federal districts across the country. Since its inception in March 2007, the program has charged more than 6,200 defendants who collectively billed federal healthcare programs and private insurers more than $45 billion.
Administrative Enforcement Moves Faster Than Indictment
The criminal charges are only part of the exposure. In connection with the 2026 Takedown, CMS suspended 1,079 providers and revoked billing privileges for 1,403 providers. HHS-OIG imposed more than 1,400 provider exclusions and brought 25 actions under the Civil Monetary Penalties Law seeking over $10 billion. There were 48 civil monetary settlements totaling more than $73 million, civil charges against 13 defendants, and civil settlements with 31 more. A DME supplier can lose its revenue, its billing privileges, and its ability to participate in Medicare before a single count is returned by a grand jury.
The DMEPOS Enrollment Moratorium and the CRUSH Initiative
On February 27, 2026, CMS imposed the first nationwide DMEPOS enrollment moratorium in the program’s history. The Federal Register notice bars initial Medicare enrollment for seven categories of medical supply company DMEPOS supplier, and it reaches non-exempt changes in majority ownership under 42 C.F.R. § 424.551. CMS cited a 17 percent revocation rate for those supplier categories between 2023 and 2025, nearly three times the rate for all other DMEPOS supplier types. The moratorium runs six months and may be extended in six-month increments.
Two related changes compound the effect. Effective January 1, 2026, CMS extended the 36-month rule to DMEPOS suppliers, meaning a change in majority ownership within 36 months of enrollment requires a new application and is therefore captured by the moratorium. CMS also issued a Request for Information under its Comprehensive Regulations to Uncover Suspicious Healthcare initiative, known as the CRUSH Rule, seeking comment on enhanced enrollment screening, ownership transparency, preclusion list reform, and increased surety bond requirements for DME suppliers. Comments closed March 30, 2026. A proposed rule is expected.
Data Analytics Now Drive Case Selection
The Health Care Fraud Unit’s Data Fusion Center, which combines analysts from DOJ, HHS-OIG, FBI, and CMS, generated many of the cases charged in 2026. Its Financial Intelligence Review Team produced its first prosecution this year, opened within five days of a financial intelligence review. DOJ and CMS have now agreed to give the Fraud Division cloud computing space inside the CMS Integrated Data Repository to run advanced analytics and artificial intelligence tools directly against claims data. The Division has entered parallel data-sharing agreements with the Department of Homeland Security and the Federal Trade Commission.
The practical consequence for DME suppliers is a shift from pay-and-chase to detect-and-prevent. Billing anomalies are flagged, payments are frozen, and enrollment is revoked before any charging decision is made. DME suppliers, company owners, ordering physicians, sales representatives, and marketers face immediate and simultaneous criminal, civil, and administrative exposure. The enforcement environment for DME fraud is the most aggressive it has ever been.
The firm’s DME fraud defense practice is built on healthcare fraud trial experience, deep knowledge of Medicare DME supplier enrollment and billing requirements, and years of experience investigating and prosecuting complex healthcare fraud cases at DOJ’s Fraud Section. These tools are deployed at every phase of a case.
Challenging the Government’s Billing Analysis
Federal DME fraud cases are built on Medicare claims data. The government identifies suppliers with billing volumes that diverge from peer averages, unusually high claim-to-delivery ratios, geographic billing anomalies, and rapid spikes in claims volume following enrollment or ownership changes. The firm challenges the government’s data at every level: the selection of comparators, the methodology used to identify outliers, the assumptions underlying extrapolation calculations, and the conclusions drawn from aggregate billing patterns. A billing anomaly is not fraud. The firm ensures that distinction is drawn clearly and forcefully.
Medical Necessity and Ordering Physician Defense
The government’s case often hinges on the claim that DME was not medically necessary or that physicians’ orders were issued without a legitimate patient evaluation. The firm retains qualified medical experts to review patient records, physicians’ orders, and clinical documentation. These experts can establish that the prescribed equipment was clinically appropriate, that the ordering physician conducted a legitimate evaluation, and that the equipment met the patient’s documented medical needs. Expert testimony on medical necessity is critical to rebutting the government’s characterization of legitimate prescribing as fraudulent ordering.
Medicare DMEPOS Supplier Standards and Billing Rules
DME billing is governed by a complex web of Medicare supplier standards, CMS coverage determinations, HCPCS codes, prior authorization requirements, and competitive bidding rules. The firm analyzes the applicable supplier enrollment requirements, billing rules, and coverage criteria to challenge the government’s interpretation. Regulatory complexity and inconsistent CMS guidance are powerful defense tools. Many claims the government characterizes as fraudulent are better explained by confusing billing requirements, evolving coverage determinations, or good faith compliance efforts.
Challenging the Government’s Proof of Knowledge and Intent
Federal healthcare fraud requires proof of willful and knowing fraud. Billing errors are not crimes. The firm builds the factual record to demonstrate that the supplier acted in good faith, relied on existing compliance programs or professional guidance, and did not intend to defraud Medicare. Where the government relies on cooperating witness testimony to establish intent, the firm attacks the reliability, credibility, and motivations of those witnesses. The firm’s attorneys have extensive experience cross-examining cooperating witnesses in federal healthcare fraud trials.
Federal DME fraud investigations target individuals at every level of the supply chain: from the owners and executives who control DME companies, to the physicians who sign orders, the sales representatives who market equipment, and the billing staff who submit claims. Armstrong & Bradylyons PLLC defends these individuals in federal investigations, after indictment, and at trial.
Defense of DME Supplier Owners and Operators
The firm defends the founders, owners, and operators of DME supply companies in federal fraud, Anti-Kickback Statute, and money laundering investigations and prosecutions. DME company owners are the primary targets of federal enforcement. Prosecutors pursue owners who allegedly submitted claims for equipment never delivered, billed for medically unnecessary equipment, paid kickbacks for patient referrals or signed physicians’ orders, used nominee or straw owners to conceal their involvement, or operated companies whose sole purpose was to generate fraudulent Medicare claims. The firm defends DME owners against these allegations by challenging the government’s evidence of personal knowledge, direction, and intent.
Defense of Ordering Physicians
The firm defends physicians who face federal exposure for signing orders for durable medical equipment. Ordering physicians are increasingly targeted when the government alleges that they signed orders without conducting legitimate patient evaluations, signed pre-completed order forms supplied by DME companies or telemarketers, or received kickbacks disguised as consulting fees, medical director fees, or other compensation in exchange for signing orders. The firm defends ordering physicians by challenging the government’s clinical evidence and establishing the legitimate medical basis for the physician’s prescribing decisions.
Defense of Sales Representatives and Marketers
The firm defends DME sales representatives, independent marketers, and call center operators in federal investigations. Sales professionals face criminal exposure when the government alleges that they paid kickbacks to physicians for signed orders, purchased patient leads or beneficiary information, used deceptive telemarketing practices to solicit patients, or marketed DME to patients who did not need it. The government scrutinizes marketing agreements that it views as disguised kickback arrangements. The firm defends marketers by challenging the government’s characterization of legitimate business relationships as illegal kickback schemes.
Defense of Telehealth Companies, Platforms, and Providers
The firm defends telehealth companies, platform operators, and remote providers whose consultations generated orders for durable medical equipment. The government’s theory in these cases is that the telehealth encounter was a formality used to produce a signed order rather than a genuine clinical evaluation. Investigators examine consultation duration, whether the provider ever spoke with the beneficiary, whether the order preceded the encounter, and whether compensation was tied to completed consults or orders. At DOJ, the firm’s attorneys oversaw and coordinated a nationwide enforcement action involving durable medical equipment prescribed through telehealth, involving over $100 million in claims to federal healthcare programs. The firm uses that experience to defend compliant remote care against sham-consultation allegations.
Defense of Healthcare Executives and Investors
The firm defends healthcare executives, management company operators, and investors in DME companies. Federal prosecutors use theories of conspiracy and aiding and abetting to reach individuals beyond those who directly submitted false claims. Executives, silent partners, and investors who exercised operational control over DME companies face federal fraud, kickback, and money laundering charges. The firm defends these individuals by challenging the government’s proof of knowledge, personal involvement, and intent.
Defense of Billing Staff and Administrative Personnel
The firm defends billing managers, office managers, and other administrative personnel in federal DME fraud investigations and cases. These individuals face criminal exposure when the government alleges that they submitted or directed the submission of false claims, maintained fraudulent documentation, or participated in schemes to conceal the true nature of the DME company’s operations. The firm defends administrative personnel by challenging the government’s evidence of knowing participation in fraudulent conduct.
Federal DME fraud investigations follow a pattern. Understanding that pattern is the first step to defending against it. Scott Armstrong and Drew Bradylyons built these types of cases as senior prosecutors at DOJ’s Fraud Section. They know how federal investigators identify targets, develop evidence, and present cases to grand juries.
Claims Data Analytics
The investigation typically begins with data. HHS-OIG, CMS, and the FBI use sophisticated claims data analytics and AI-driven tools to identify DME suppliers with anomalous billing patterns. The government’s Health Care Fraud Data Fusion Center combines data from DOJ, HHS-OIG, FBI, and CMS to detect billing anomalies in real time. Investigators flag suppliers with sudden spikes in claims volume, billing for high-cost items at volumes that exceed peer averages, geographic billing patterns inconsistent with the supplier’s location, and claims submitted shortly after enrollment or ownership changes. These data-driven flags trigger the deeper investigation.
Supplier Enrollment and Ownership Scrutiny
Federal investigators scrutinize DME supplier enrollment applications, ownership disclosures, and changes of ownership. CMS requires DME suppliers to disclose all owners, managing employees, and individuals with operational control. Investigators look for nominee or straw owners, concealed felony convictions that would disqualify the supplier from Medicare enrollment, undisclosed ownership interests, and patterns of companies being acquired and then rapidly generating high volumes of claims. Operation Gold Rush demonstrated the government’s focus on transnational organizations that purchase legitimate DME companies and convert them into vehicles for fraudulent billing.
Delivery Verification
The government investigates whether DME was actually delivered to patients. Investigators visit patients at their homes, interview beneficiaries, review delivery records and proof-of-delivery documentation, and compare claims to actual delivery logs. In many DME fraud prosecutions, the government’s core allegation is that the equipment was never delivered at all. In other cases, the government alleges that equipment was delivered but was not the item billed, was of inferior quality, or was never ordered by the patient’s physician.
Ordering Physician and Telehealth Encounter Analysis
The government examines the relationship between the DME supplier and the ordering physicians. Investigators analyze whether the physician had a legitimate patient relationship, whether the physician conducted a face-to-face or compliant remote evaluation before signing the order, whether the physician signed pre-completed order forms without reviewing the patient’s medical records, and whether the physician received compensation from the DME supplier that could constitute a kickback. In telehealth-generated DME cases, investigators pull platform metadata: consultation length, whether audio or video occurred, and whether the order was created before the encounter. Physicians who sign high volumes of orders for a single DME supplier are flagged for scrutiny.
Kickback and Marketing Analysis
The government investigates referral relationships and marketing arrangements. In DME fraud cases, prosecutors examine whether suppliers paid kickbacks to physicians for signed orders, purchased patient leads or beneficiary information from call centers or telemarketers, paid per-order or per-referral fees disguised as marketing or consulting fees, or entered into sham medical directorship or consulting agreements with ordering physicians. Marketing agreements that tie compensation to referral volume are a primary enforcement target under the Anti-Kickback Statute (42 U.S.C. § 1320a-7b).
Search Warrants for Electronic Devices and Cloud Accounts
Federal agents routinely seek and execute search warrants for cell phones, laptops, tablets, and cloud-based accounts in DME fraud investigations. These warrants target text messages, emails, iCloud backups, Google Drive contents, and messaging applications. The government is looking for communications between owners, sales representatives, physicians, and billing staff that reveal knowledge of fraudulent billing, directives to submit claims for undelivered equipment, discussions about kickback payments, and efforts to conceal the true ownership or operations of the DME company.
Cloud account warrants are particularly powerful. Federal agents obtain these warrants under 18 U.S.C. § 2703 of the Stored Communications Act and serve them directly on Apple, Google, and other service providers. The target of the warrant may not learn of its existence until well after the government has obtained and reviewed the contents.
Whistleblower Lawsuits
A significant number of federal DME fraud investigations originate from qui tam whistleblower lawsuits filed under the False Claims Act. Current or former employees file sealed complaints alleging that the DME supplier submitted false claims to Medicare. The DOJ investigates the complaint while it remains under seal. If DOJ intervenes, the case is unsealed and the supplier faces both civil FCA liability and potential criminal prosecution. The whistleblower receives 15% to 25% of any recovery. DME suppliers should be aware that most criminal DME fraud cases brought by DOJ grow out of whistleblower lawsuits.
Federal DME fraud enforcement has a center of gravity and an expanding perimeter. The center remains the Health Care Fraud Strike Force districts, now organized into nine strike forces: National Rapid Response, Florida, Gulf Coast, Los Angeles, Midwest, New England, Northeast, Texas, and West Coast. The perimeter is much wider than it was. The 2026 National Health Care Fraud Takedown brought cases in 56 federal districts across 45 states and territories, prosecuted by those nine strike forces, 56 U.S. Attorney’s Offices, and 45 State Attorneys General’s Offices. Armstrong & Bradylyons PLLC defends DME suppliers in all of them.
Southern District of Florida
The Southern District of Florida remains the epicenter of DME fraud enforcement, and 2026 confirmed it. The district charged the continuation of the Operation Gold Rush scheme, alleging an additional $3.7 billion in false claims for urinary catheters and other durable medical equipment that was never provided. The lead defendant fled the country, was apprehended in Kyrenia, and made his initial appearance in Miami. Five additional defendants were charged. The district also executed a data-driven seizure of over $27 million in fraudulent Medicare payments tied to bust-out schemes at 12 clinics. In July 2025, a Florida DME owner was sentenced to 12 years in prison for a $61 million scheme. South Florida has the deepest bench of healthcare fraud prosecutors in the country and the highest concentration of DME billing history. It is the highest-risk jurisdiction for a DME supplier.
Eastern District of New York
The Eastern District of New York was a lead charging district in Operation Gold Rush, the $10.6 billion transnational DME scheme. In June 2026, two members of that organization were apprehended in Estonia, extradited, and made their initial appearance in Brooklyn. The district also charged eight defendants in a $38 million New York Medicaid scheme involving services that were medically unnecessary, procured by kickbacks, and never provided. EDNY pairs an aggressive enforcement posture with active international extradition practice. DME suppliers operating in the New York metropolitan area face significant exposure.
Northern District of Illinois
The Northern District of Illinois was a charging district in Operation Gold Rush and is a long-standing Strike Force jurisdiction. Illinois also produced the first prosecution generated by the Health Care Fraud Unit’s Financial Intelligence Review Team, a $67 million Medicaid case that investigators opened within five days of a financial intelligence review. That timeline is the point. Chicago prosecutors are now charging cases identified by analytics rather than by complaint.
Southern District of Texas
The Southern District of Texas houses the Texas Strike Force and prosecutes DME fraud aggressively. In March 2026, a Texas DME company owner was sentenced to 90 months in prison for a $59.9 million conspiracy involving kickbacks for signed doctors’ orders and billing for medically unnecessary orthotic braces. The district also charged the single largest provider-level case in the 2026 Takedown, a $906 million scheme against a nurse practitioner. Houston is a major DME billing market with a deeply experienced prosecutorial infrastructure.
Central District of California
The Central District of California was a charging district in Operation Gold Rush and is served by both the Los Angeles and West Coast Strike Forces. Los Angeles is one of the largest DME billing markets in the country. The district charged a $27.7 million hospice fraud scheme in 2026 in which the owner allegedly purchased decedent information to manipulate the outlier metrics the government uses to detect fraud. That case reflects how sophisticated CDCA prosecutors are about data, and how closely they watch attempts to defeat it.
District of New Jersey
The District of New Jersey was a charging district in Operation Gold Rush. New Jersey has a high concentration of DME suppliers and a history of DME fraud enforcement. The district coordinates with the Eastern District of New York on cross-jurisdictional DME cases and with the Northeast Strike Force.
Beyond the Strike Force Footprint
DME enforcement is no longer confined to Strike Force cities. The 2026 Takedown charged cases in 56 districts, including the Middle District of Florida, the Eastern District of Michigan, the Northern and Western Districts of Texas, the Eastern District of Virginia, the District of Arizona, and the District of South Carolina, where the government indicted a fugitive charged in a $1.2 billion telemedicine and durable medical equipment scheme. Fifty state Medicaid Fraud Control Units participated, the most in Department history, which means state and federal exposure now frequently arrive together.
CMS’s nationwide DMEPOS enrollment moratorium and its CRUSH initiative apply everywhere, not in selected markets. Scott Armstrong and Drew Bradylyons defend DME suppliers in every federal district where DOJ, CMS, and HHS-OIG bring these cases.
Federal DME fraud prosecutions draw on several criminal statutes. The charges carry severe penalties. Understanding the statutory framework is essential to mounting an effective defense.
Healthcare Fraud (18 U.S.C. § 1347)
The primary charging statute in DME fraud cases. Healthcare fraud makes it a federal crime to knowingly and willfully execute or attempt to execute a scheme to defraud any healthcare benefit program. In DME cases, this statute targets billing for equipment never delivered, billing for medically unnecessary equipment, and billing for equipment procured through kickback arrangements. The penalty is up to 10 years of imprisonment per count. If the fraud results in serious bodily injury, the maximum increases to 20 years. If it results in death, a life sentence is possible.
Wire Fraud (18 U.S.C. § 1343)
The government frequently charges wire fraud alongside or as an alternative to healthcare fraud. Wire fraud applies to any scheme to defraud that uses interstate wire communications, which includes the electronic submission of Medicare claims. Wire fraud carries a maximum penalty of 20 years of imprisonment per count.
Anti-Kickback Statute (42 U.S.C. § 1320a-7b)
The Anti-Kickback Statute is at the heart of most DME fraud prosecutions. It prohibits offering, paying, soliciting, or receiving anything of value to induce or reward the referral of patients for services covered by federal healthcare programs. In DME cases, prosecutors target kickbacks paid to physicians for signed orders, per-lead or per-referral payments to marketers and call centers, compensation tied to referral volume disguised as marketing or consulting fees, and payments to patient recruiters. Violations carry up to 10 years of imprisonment per violation.
Money Laundering (18 U.S.C. §§ 1956, 1957)
Money laundering charges are common in DME fraud prosecutions. The government charges money laundering when it alleges that defendants conducted financial transactions involving the proceeds of the DME fraud scheme with the intent to conceal or promote the underlying fraud. Operation Gold Rush involved money laundering through shell companies, cryptocurrency accounts, and transfers to foreign jurisdictions. Money laundering carries up to 20 years of imprisonment per count.
False Claims Act (31 U.S.C. §§ 3729–3733)
The False Claims Act is the government’s primary civil enforcement tool. It imposes liability on any person who knowingly submits or causes the submission of false or fraudulent claims to the government. In DME fraud cases, the FCA targets claims for undelivered equipment, medically unnecessary equipment, and equipment procured through kickback arrangements. Penalties include treble damages and per-claim penalties. A significant number of federal DME fraud cases originate from qui tam whistleblower lawsuits filed under the FCA.
Federal Program Exclusion and Collateral Consequences
Beyond incarceration and fines, a conviction or settlement in a DME fraud case triggers mandatory exclusion from Medicare, Medicaid, and all federal healthcare programs under the authority of HHS-OIG. For physicians, exclusion effectively ends the ability to bill any federal healthcare program. For DME company owners, exclusion prevents future participation in the Medicare supplier program. CMS may also revoke the supplier’s Medicare enrollment and impose a re-enrollment bar that prevents the supplier from reapplying for years.
What Should I Do If My DME Company Is Under Federal Investigation?
Retain experienced federal defense counsel before responding to anyone. Do not speak with federal agents, CMS contractors, HHS-OIG investigators, or auditors about the investigation until counsel is engaged.
Federal DME fraud investigations begin in recognizable ways: a grand jury subpoena, agent contact from the FBI or HHS-OIG, a prepayment review or targeted probe audit, a Medicare payment suspension, a revocation of billing privileges, or a sealed qui tam whistleblower complaint that is later unsealed. In 2026, the administrative action frequently arrives first. CMS suspended 1,079 providers and revoked billing privileges for 1,403 providers in connection with the June 2026 Takedown alone.
What you produce and say in the first weeks shapes the entire case. Counsel controls communication with the government, defines the scope of any subpoena or audit response, protects privilege, preserves the record, and builds a defense before charging decisions are made. Scott Armstrong and Drew Bradylyons defend DME suppliers and their owners at the investigation stage and at trial, drawing on years as senior prosecutors at DOJ’s Fraud Section.
What Was the 2026 National Health Care Fraud Takedown and What Does It Mean for DME Suppliers?
On June 23, 2026, DOJ announced the 2026 National Health Care Fraud Takedown. It charged 455 defendants, including 90 doctors and other licensed medical professionals, in schemes involving more than $6.5 billion in alleged false claims. The cases reached 56 federal districts across 45 states and territories, with 50 state Medicaid Fraud Control Units participating. The government seized over $182 million in assets. It is the largest coordinated healthcare fraud action in DOJ history.
Three points matter for DME suppliers. First, DME remained a centerpiece: the government charged an additional $3.7 billion in claims for urinary catheters and other equipment allegedly never provided. Second, the enforcement footprint expanded far beyond the traditional Strike Force cities. Third, criminal charges arrived alongside payment suspensions, revocations, exclusions, and civil settlements, so the financial consequences begin long before trial.
HHS-OIG maintains its own 2026 Takedown enforcement page documenting the coordinated actions.
What Is the National Fraud Enforcement Division and Why Does It Matter?
On April 7, 2026, the Acting Attorney General established the National Fraud Enforcement Division, a standalone DOJ litigating division focused on fraud against taxpayer-funded programs. The Criminal Division’s Health Care Fraud Unit, Tax Section, and Market, Government, and Consumer Fraud Unit were placed under its operational control effective immediately. The Division supports Executive Order 14395 and the White House Task Force to Eliminate Fraud.
For a DME supplier, the practical change is centralization. Priorities and resources for healthcare fraud prosecutions are now set at the Division level rather than unit by unit. Referrals move faster, and a matter identified by one agency becomes a multi-agency matter quickly. The 2026 Takedown was the Division’s first major public healthcare fraud action.
The Health Care Strike Force program now runs nine strike forces nationwide. Since 2007 it has charged more than 6,200 defendants who billed federal programs and private insurers over $45 billion.
What DME Billing Practices Trigger Federal Investigations?
Federal investigators target specific patterns. The most common triggers are billing for equipment never delivered to the patient, billing for medically unnecessary equipment ordered without a legitimate physician evaluation, upcoding to higher-reimbursement HCPCS codes, sudden spikes in claims volume following enrollment or a change in ownership, billing under a physician’s NPI without authorization, and marketing or referral arrangements that tie compensation to order volume.
Detection is now largely automated. The Health Care Fraud Unit’s Data Fusion Center pools analysts from DOJ, HHS-OIG, FBI, and CMS. Its Financial Intelligence Review Team layers financial analysis onto claims analytics. DOJ and CMS have agreed to give the Fraud Division cloud computing space inside the CMS Integrated Data Repository to run artificial intelligence tools directly against claims data.
A billing anomaly is not fraud. But in the current environment, an anomaly is what starts the file.
What Are the Penalties for a Federal DME Fraud Conviction?
The penalties are severe. Healthcare fraud (18 U.S.C. § 1347) carries up to 10 years of imprisonment per count, 20 years if the offense results in serious bodily injury, and life if it results in death. Wire fraud carries up to 20 years per count. Money laundering carries up to 20 years per count. Anti-Kickback Statute violations carry up to 10 years per violation.
Sentences in recent DME and related cases have been long. They include 15 years for a healthcare software CEO whose platform facilitated DME billing, 12 years for a Florida DME owner in a $61 million scheme, and 15.5 and 14 years in a wound graft case DOJ cited again in 2026.
Beyond incarceration, defendants face fines, restitution, and forfeiture. Conviction triggers mandatory exclusion from Medicare, Medicaid, and all federal healthcare programs, plus CMS revocation and a re-enrollment bar.
Is the Nationwide DMEPOS Enrollment Moratorium Still in Effect?
The moratorium took effect February 27, 2026 and runs for six months. CMS may extend it in six-month increments and must publish a further Federal Register notice to extend or lift it. Suppliers and buyers should confirm current status on the CMS Provider Enrollment Moratoria page before relying on any assumed expiration date.
The moratorium bars initial Medicare enrollment for seven categories of medical supply company DMEPOS supplier. It also captures non-exempt changes in majority ownership under 42 C.F.R. § 424.551. Applications filed during the moratorium are denied. Existing enrolled suppliers may continue billing.
The transactional effect is significant. Effective January 1, 2026, CMS extended the 36-month rule to DMEPOS suppliers, so a majority ownership change within 36 months of enrollment requires a new application, which the moratorium then blocks. CMS justified the freeze with a 17 percent revocation rate for the affected supplier categories from 2023 to 2025, nearly triple the rate for other DMEPOS types.
What Happens If CMS Suspends My Payments or Revokes My Billing Privileges?
A payment suspension or revocation is an administrative action, not a criminal charge, and it can be imposed on a credible allegation of fraud without any indictment. It is often the first visible sign that a criminal investigation exists.
The financial impact is immediate. Revenue stops while overhead, payroll, and inventory obligations continue. Revocation carries a re-enrollment bar, and CMS has stated it intends to publish revocation information, including the reason for revocation and the associated NPI.
There is an administrative appeal path, including reconsideration and review before an Administrative Law Judge and the Departmental Appeals Board. Those submissions must be handled with the parallel criminal investigation in view. Statements made to defend billing privileges can be used to build a criminal case. Scott Armstrong and Drew Bradylyons approach every administrative response with that risk in front of them.
Can I Be Charged for DME Prescribed Through Telemedicine?
Yes. Telehealth-ordered durable medical equipment is one of the most heavily prosecuted structures in federal healthcare fraud. Telemedicine is lawful. The government’s theory in these cases is that the encounter was a formality used to generate a signed order, not a genuine clinical evaluation.
Investigators examine the length of the consultation, whether the provider ever spoke with the patient, whether the order was generated before the encounter occurred, whether the beneficiary was solicited by a call center or lead generator, and whether the telehealth company was compensated per order, per lead, or per completed consult. Compensation tied to order volume is the fact prosecutors look for first.
The exposure is current. In 2026, the FBI’s Most Wanted Fraudsters List included a fugitive charged in a $1.2 billion telemedicine and durable medical equipment scheme. He was apprehended in the Philippines within four days and indicted in the District of South Carolina.
At DOJ, the firm’s attorneys oversaw and coordinated a nationwide enforcement action involving durable medical equipment prescribed through telehealth, involving over $100 million in claims to federal healthcare programs. The firm uses that experience to challenge the government’s characterization of compliant remote evaluations as sham consultations, using platform data, clinical records, and expert testimony.
What Experience Does Armstrong & Bradylyons PLLC Have in DME Fraud Cases?
The firm’s attorneys built federal healthcare fraud cases before they defended them. Scott Armstrong, Drew Bradylyons, and Andrea Savdie tried 17 federal jury trials in healthcare fraud cases at the Healthcare Fraud Unit of DOJ’s Fraud Section, involving over $2.8 billion in alleged false and fraudulent claims. Across all complex fraud matters, the firm’s attorneys have tried 25 federal jury trials.
The DME experience is direct and specific. At DOJ, the firm’s attorneys served as lead counsel in a $60 million scheme involving fraudulent claims to Medicare for durable medical equipment that was medically unnecessary and procured through kickbacks and bribes. They also oversaw and coordinated a nationwide enforcement action involving durable medical equipment prescribed through telehealth, involving over $100 million in claims to federal healthcare programs.
The firm’s attorneys also supervised the Healthcare Fraud Unit’s Miami Strike Force, the most active DME enforcement office in the country, directed DOJ’s Appalachian Regional Prescription Drug Task Force, and served as Chief of EDVA’s Financial Crimes and Public Corruption Unit.
That background matters because DME cases are built in a predictable sequence: analytics identify the supplier, investigators test delivery and medical necessity, and prosecutors reach ownership through kickback and intent evidence. The firm knows how each step is constructed, because its attorneys constructed them.
What Defenses Are Available in a Federal DME Fraud Case?
The available defenses depend on the allegations. The most common are these:
Lack of intent to defraud. The government must prove willful and knowing fraud. Billing errors, compliance failures, and negligent oversight are not crimes.
Medical necessity. Physicians’ orders, patient records, coverage criteria, and qualified expert testimony can establish that the equipment was clinically appropriate.
Delivery verification. Proof-of-delivery documentation, shipping and logistics records, and beneficiary testimony rebut the claim that equipment was never provided.
Legitimate marketing arrangements. The defense can show compliance with applicable OIG safe harbor regulations or that compensation reflected fair market value for actual services.
Challenging the data. The government’s analytics rest on chosen comparators, inputs, and extrapolation assumptions. Each is contestable, and each becomes a summary exhibit at trial.
Scott Armstrong and Drew Bradylyons use their federal trial experience as former prosecutors to anticipate the government’s theory and build an evidence-based defense from day one.
What Is Operation Gold Rush and Is It Still Being Prosecuted?
Yes. Operation Gold Rush was announced in June 2025 as part of the $14.6 billion National Health Care Fraud Takedown. A transnational criminal organization used foreign straw owners to acquire dozens of Medicare-enrolled medical supply companies and submitted $10.6 billion in fraudulent claims for urinary catheters and other DME using the stolen identities of more than one million Americans. Twenty-nine defendants were charged.
The prosecution expanded in 2026. In the Southern District of Florida, a defendant was charged in connection with an additional $3.7 billion in false claims for catheters and other DME never provided. He fled, was apprehended in Kyrenia, and made his initial appearance in Florida. Two defendants charged in 2025 were apprehended in Estonia and extradited to the Eastern District of New York. Five more defendants were charged.
The case illustrates how the government now approaches DME fraud: straw and nominee ownership, acquisition of existing enrolled suppliers, identity-driven billing, and coordinated international apprehension.
Can an Ordering Physician Be Charged with DME Fraud?
Yes, and physicians were a stated priority in 2026. The Takedown charged 90 doctors and other licensed medical professionals, and DOJ framed the action as reaching both the architects of fraud and the licensed professionals who carry it out.
Prosecutors target physicians who allegedly signed orders without a legitimate patient evaluation, signed pre-completed order forms supplied by DME companies or telemarketing operations, or accepted compensation structured as consulting, medical directorship, or per-order fees. High order volume for a single supplier draws scrutiny by itself.
Defending an ordering physician requires attacking the clinical premise of the government’s case, not just the documentation. At DOJ, the firm’s attorneys served as lead counsel in a $60 million DME scheme built on allegations of medical necessity and kickbacks, the same architecture the government uses against ordering physicians today. Scott Armstrong and Drew Bradylyons now defend physicians against those theories.
What Is the Difference Between a Civil and Criminal DME Fraud Investigation?
Civil investigations focus on recovering money. They proceed through False Claims Act actions and Civil Investigative Demands, with treble damages and per-claim penalties. Many begin as sealed qui tam whistleblower suits.
Criminal investigations focus on proving intentional and willful fraud beyond a reasonable doubt. They carry imprisonment, criminal fines, restitution, and forfeiture.
The two run in parallel, and a third track now runs alongside both. The 2026 Takedown paired criminal charges with 48 civil monetary settlements exceeding $73 million, more than 1,400 exclusions, and 25 HHS-OIG actions under the Civil Monetary Penalties Law seeking over $10 billion. Statements made in an audit response, a CID production, or an enrollment appeal can be used to build the criminal case. Scott Armstrong and Drew Bradylyons have handled parallel civil and criminal healthcare fraud matters at DOJ’s Fraud Section and as defense counsel.
Can a DME Company Owner Be Held Personally Liable for Fraud by Employees?
Yes. DOJ described the 2026 Takedown as delivering accountability from doctors’ offices to corporate boardrooms. Owners and executives are the priority targets, not an afterthought.
An owner need not have personally submitted a claim. If a provider causes another person to submit a claim knowing it is false or fraudulent, criminal liability may attach. The government relies on conspiracy (18 U.S.C. § 371) and aiding and abetting (18 U.S.C. § 2) to reach beyond the person who pressed submit.
Prosecutors examine whether the owner knew of, directed, or deliberately avoided knowledge of the conduct. That element is where these cases are won and lost. The firm builds the factual record on knowledge and control from the first day of the engagement.
Does Armstrong & Bradylyons PLLC Handle DME Fraud Cases Outside of Washington, D.C.?
Yes. The firm defends individuals in federal DME fraud investigations and prosecutions nationwide and can appear in every federal district court in the country.
Enforcement remains concentrated in Strike Force districts, including the Southern District of Florida, the Eastern District of New York, the Northern District of Illinois, the Southern District of Texas, the Central District of California, and the District of New Jersey. The footprint is widening. The 2026 Takedown brought cases in 56 federal districts across 45 states and territories, prosecuted by nine Health Care Fraud Strike Forces, 56 U.S. Attorney’s Offices, and 45 State Attorneys General’s Offices.
Scott Armstrong and Drew Bradylyons have tried healthcare fraud cases and run investigations in Strike Force districts and federal courts across the country. The firm represents clients wherever DOJ, CMS, and HHS-OIG pursue DME fraud.