DOJ Launches West Coast Health Care Fraud Strike Force: Federal Investigations in Arizona, Nevada, and Northern California
On April 30, 2026, DOJ’s National Fraud Enforcement Division announced the West Coast Health Care Fraud Strike Force, a multi-district enforcement initiative covering the District of Arizona, District of Nevada, and Northern District of California. The Strike Force model has produced the prosecution of over 6,200 defendants who collectively billed federal health care programs and private insurers more than $45 billion.
The expansion is driven by data showing accelerating health care fraud across all three districts. Recent prosecutions include a $1.2 billion wound graft fraud in Arizona, a $100 million telehealth Adderall distribution scheme in Northern California, a $650 million Medicaid billing fraud involving substance abuse clinics in Arizona, and a COVID-19 securities and health care fraud conviction in the Northern District of California. Individuals under investigation or facing indictment in these districts now confront a dedicated Strike Force infrastructure with enhanced data analytics, dedicated federal prosecutors, and multi-agency investigative teams.
Why This Expansion Matters for Individuals Under Investigation
The West Coast Strike Force assigns dedicated federal prosecutors from DOJ’s Health Care Fraud Section, FBI agents, HHS-OIG investigators, and DEA agents to three federal districts. The announcement comes less than a month after DOJ created the National Fraud Enforcement Division on April 7, 2026, consolidating the Health Care Fraud Unit, Market, Government, and Consumer Fraud Unit, and Tax Section under a single command led by Assistant Attorney General Colin McDonald.
The prosecutors now assigned to these districts are specialists who have tried health care fraud cases in other Strike Force districts. They know the billing codes, the referral patterns, and the financial structures that characterize specific fraud schemes.
In 2025, DOJ led the largest-ever National Health Care Fraud Takedown, charging more than $15 billion in alleged losses and forfeiting over $560 million. A third-party analysis found the Health Care Fraud Section generates an average return of $106.76 per dollar spent over a ten-year horizon.
How Strike Force Investigations Are Built
The government does not begin with an arrest. It begins with data. The investigation is typically months or years old before the target knows it exists.
Stage 1: Data Analytics Identification
The DOJ Health Care Fraud Data Fusion Center combines CMS billing data with HHS-OIG investigative data and AI-driven analytics to identify billing outliers. The system flags providers whose billing volume, coding patterns, referral relationships, or geographic concentration deviate from statistical norms. The West Coast Strike Force announcement states explicitly that data analytics identified the migration of fraud schemes to Arizona and Nevada. That is the system at work.
The Data Fusion Center generates investigative leads. It does not generate indictments. But by the time a lead reaches a Strike Force prosecutor, the government already has a statistical profile of the target’s billing history. That profile shapes every subsequent investigative decision.
For individuals, this means a critical fact: the first indication of an investigation may be an administrative audit, a UPIC prepayment review notice, or a CMS inquiry that appears routine. It is not routine. It may be the visible surface of a criminal investigation that is already underway.
Stage 2: Grand Jury Subpoenas and Covert Search Warrants
Once a Strike Force prosecutor decides to open a criminal investigation, the tools change. Grand jury subpoenas compel the production of billing records, clinical documentation, financial records, and communications. These subpoenas are issued under the authority of a federal grand jury and carry the force of contempt sanctions for noncompliance.
Simultaneously, prosecutors obtain covert search warrants for electronic communications. These warrants target email accounts, text messages, and increasingly, messages from encrypted and ephemeral messaging applications. Prosecutors obtain these messages through search warrants for iCloud backups, Google account warrants, and forensic examination of seized devices. A single text message or internal chat exchange can become the most damaging piece of evidence in the case. In the Done Global prosecution, the government recovered evidence that the CEO used encrypted messaging apps with disappearing messages, deleted incriminatory documents, and transferred over $1 million to a Chinese shell company.
The covert phase is the most dangerous for individuals. The investigation is active. The government is collecting evidence. The individual does not know. Voluntary statements made to auditors, inspectors, or colleagues during this period are admissible at trial. There is no privilege protecting those statements.
Stage 3: Cooperating Witnesses
Cooperating witnesses are central to Strike Force prosecutions. FBI and HHS-OIG agents interview current and former employees, patients, billing staff, sales representatives, and business associates. Individuals who face their own criminal exposure may agree to cooperate in exchange for consideration at sentencing. In health care fraud cases, cooperators are frequently billing clerks, office managers, nurse practitioners, and marketers.
Cooperators create two problems for the individual under investigation. First, employees may be cooperating without the individual’s knowledge, including making recordings of conversations at the direction of federal agents. Agent contact with staff is a serious indicator of an advanced criminal investigation. Second, cooperators have an incentive to provide testimony favorable to the government. That incentive creates bias. Effective cross-examination at trial exposes the gap between what a cooperator claims to know and what the cooperator actually observed. A billing clerk who coded claims may have done so based on her own understanding of billing rules, not based on a directive from the physician or owner. That distinction matters at trial.
In the Gehrke and King wound graft prosecution, the government identified co-conspirators who participated in the kickback and sales representative network. In the Done Global case, nurse practitioners who were paid up to $60,000 per month to refill prescriptions without clinical interaction became potential cooperating witnesses. In the Ali indictment, the government’s theory depends on proving that the billing company owner directed the fraud across 41 clinics. The cooperating witnesses from those clinics are central to that theory.
Stage 4: The Indictment
A federal grand jury returns an indictment after the government presents evidence establishing probable cause. In Strike Force cases, the indictment is typically accompanied by arrest warrants, asset seizures, and forfeiture actions. Many of the investigative steps described above, including cooperating witness agreements, electronic evidence collection, and loss calculations, precede the indictment and inform its scope. In the Gehrke and King case, the government had already seized $126 million in assets, including funds from dozens of bank accounts, life insurance annuities, luxury vehicles, and cash. The Done Global CEO was stopped by law enforcement while attempting to leave the country.
The loss figure the government constructs during the investigation drives the sentencing calculation. Under the U.S. Sentencing Guidelines, the intended loss amount is the primary driver of the offense level. A $1.2 billion loss figure produces a Guidelines range at the top of the table before any adjustments.
The Agencies That Build These Cases
Strike Force cases are not built by a single agency. They are joint investigations coordinated across multiple federal agencies, each with distinct investigative tools.
| Agency | Role | Investigative Tools |
|---|---|---|
| DOJ Fraud Division / Health Care Fraud Section | Directs Strike Force investigations. Makes charging decisions. Assigns dedicated trial attorneys to each district. | Grand jury subpoenas, search warrants, cooperating witness agreements, indictments, forfeiture actions |
| U.S. Attorney’s Office | Local federal prosecutors. Co-prosecutes cases with Fraud Section attorneys. | Grand jury authority, civil False Claims Act actions, parallel forfeiture proceedings |
| HHS Office of Inspector General | Primary investigative agency. Conducts audits of billing data and refers cases to DOJ. | Administrative subpoenas, Civil Investigative Demands, exclusion proceedings, data analytics |
| FBI | Criminal investigative partner. Executes search warrants and conducts witness interviews. | Search warrants, undercover operations, financial analysis, electronic surveillance |
| DEA | Investigates controlled substance diversion within health care fraud schemes. | Prescription monitoring data, controlled substance purchase records, undercover operations |
| CMS Program Integrity | Identifies billing anomalies and refers cases to civil and criminal authorities. | Data analytics, UPIC audits, billing privilege revocation, prepayment review, payment suspensions |
| IRS Criminal Investigation | Investigates tax evasion and money laundering of fraud proceeds. | Financial forensics, tax records analysis, money laundering investigation |
The West Coast Strike Force announcement names every one of these agencies. The FBI, HHS-OIG, and DEA are formal Strike Force partners. The coordination is not informal. It is structured. Acting Deputy Inspector General Scott Lampert of HHS-OIG called the Strike Force a “force multiplier” that applies investigative tools with “strategic precision.” That language reflects an enforcement posture where each agency’s investigative capabilities are deployed in sequence, from billing data analysis through arrest.
District of Arizona: Wound Care, Substance Abuse, and Sober Home Fraud
The District of Arizona has become one of the most active federal healthcare fraud jurisdictions in the country. The U.S. Attorney for the District of Arizona stated that federal law enforcement has disrupted fraud schemes worth over a billion dollars of taxpayer money in Arizona alone. Two cases illustrate the scale and variety of fraud driving the Strike Force expansion.
$1.2 Billion Wound Graft Fraud
In United States v. Gehrke and King, two Phoenix wound graft company owners were sentenced to 15.5 and 14 years in federal prison for causing over $1.2 billion in false and fraudulent claims to Medicare, TRICARE, and CHAMPVA. DOJ described it as the first prosecution of its kind. The defendants operated companies that contracted with medically untrained sales representatives to locate elderly Medicare beneficiaries with wounds and order expensive amniotic wound grafts. They directed nurse practitioners to apply grafts regardless of medical necessity. Grafts were applied to infected wounds, healed wounds, non-existent wounds, and terminally ill patients who died within days of application.
The financial structure was built on kickbacks. The wholesale graft distributor paid over $279 million in illegal kickbacks to one defendant in exchange for ordering its products. Over $100 million was diverted to personal accounts. The government seized $126 million in assets at the time of arrest. Combined restitution exceeded $1.2 billion. Separately, the defendants agreed to pay $309 million to resolve civil False Claims Act liability.
The sentences reflect the scale. But this case also illustrates a critical dynamic: the government’s loss figure was $1.2 billion, but the defendants were not physicians. They had no medical training. The fraud theory rested on the financial structure, the kickback arrangements, and the directives to override clinical judgment. That distinction between the financial architect and the clinical provider shapes both the charging decision and the defense strategy in every case with a similar structure.
$650 Million Substance Abuse Medicaid Fraud
In United States v. Ali, a grand jury indicted the owner of a Pakistan-based medical billing company for allegedly exploiting substance abuse patients at over 41 treatment clinics that fraudulently billed Arizona Medicaid more than $650 million. The defendant is a Pakistani national and remains a fugitive from justice.
This case illustrates a pattern that the Strike Force is designed to address. The alleged fraud involved a billing company that processed claims for dozens of clinics across a state. That structure allows the government to aggregate losses across every clinic into a single indictment against the individual who controlled the billing. For individuals who operate billing companies, management service organizations, or administrative platforms that serve multiple providers, the exposure is not limited to any single provider’s claims. It extends to the entire network.
Northern District of California: Technology-Driven Health Care Fraud
The U.S. Attorney for the Northern District of California called Silicon Valley “ground zero for technology-driven health care fraud schemes.” Two landmark prosecutions anchor the Strike Force’s Northern California presence.
$100 Million Adderall Distribution and Health Care Fraud
In November 2025, a federal jury in San Francisco convicted the CEO and clinical president of a digital health company for a scheme to illegally distribute over 40 million pills of Adderall over the internet and submit false claims to Medicare, Medicaid, and commercial insurers. The company operated on a subscription model. Members paid a monthly fee for online diagnoses, treatment, and refills. The evidence at trial showed that the defendants placed hard limits on clinical discretion, capped the length of initial examinations, refused to pay for follow-up care, and prohibited clinicians from discharging patients. An auto-refill feature generated prescriptions for years based on automated emails. In some instances, prescriptions were issued for deceased patients.
The CEO spent over $40 million on deceptive social media advertisements, transferred over $1 million to a Chinese shell company, conducted internet searches for countries without extradition treaties, and was stopped by law enforcement while attempting to leave the country. Both defendants were convicted of conspiracy to distribute controlled substances, four counts of distribution of controlled substances, and conspiracy to commit health care fraud. The CEO was separately convicted of conspiracy to obstruct justice.
“Not all drug dealers operate in the shadows or on street corners. Some use computers and social media instead.”
— Craig H. Missakian, U.S. Attorney, Northern District of CaliforniaThis prosecution is the first criminal drug distribution case involving a digital health platform built around online controlled substance subscriptions. It establishes that telehealth platforms are subject to the same criminal liability as brick-and-mortar prescribers when controlled substances are dispensed without legitimate medical purpose. Jacob Foster, Chief of the Health Care Fraud Unit, prosecuted this case and now leads the West Coast Strike Force.
COVID-19 Securities Fraud and Health Care Fraud
In United States v. Schena, the president of a Silicon Valley medical technology company was convicted at trial and sentenced to eight years in federal prison. This case broke new ground on multiple fronts. It was the first criminal securities fraud case related to COVID-19 charged by DOJ. It was the first criminal COVID-19 health care fraud case brought to trial. And it produced a significant appellate ruling delineating the scope of the Eliminating Kickbacks in Recovery Act (EKRA). The Ninth Circuit affirmed the conviction in United States v. Schena, No. 23-2989 (9th Cir. 2025).
The EKRA ruling matters for individuals in every West Coast Strike Force district. EKRA criminalizes kickbacks involving patients of recovery homes, clinical treatment facilities, and laboratories. Unlike the Anti-Kickback Statute, EKRA applies to payments from private insurers, not just federal health care programs. That broadens the universe of individuals and transactions subject to criminal prosecution. The Ninth Circuit’s interpretation of EKRA in Schena now controls in every federal court in Arizona, Nevada, and Northern California.
District of Nevada: The Migration Problem
The District of Nevada has not yet produced the headline-level prosecutions that Arizona and Northern California have. That is precisely why DOJ is deploying Strike Force resources there now. The Fraud Division identified Nevada as a jurisdiction where data analytics show the migration of fraud schemes from other districts.
This is a well-documented enforcement dynamic. When DOJ tightens enforcement in one geographic area, fraud networks relocate. The Central District of California has been under intense scrutiny for hospice and home health fraud. Arizona has produced billion-dollar prosecutions. Nevada is the adjacent jurisdiction with a less established federal enforcement presence. The Strike Force’s arrival changes that calculation.
For individuals operating in Nevada, the Strike Force brings dedicated prosecutors, data analytics resources, and institutional knowledge from cases in neighboring districts. Billing patterns, referral relationships, and provider networks that previously received less federal scrutiny are now within the Strike Force’s analytical reach.
The Criminal Charges in Strike Force Indictments
Strike Force indictments follow a consistent pattern. The government layers criminal statutes to maximize sentencing exposure and forfeiture potential. Each count carries its own statutory maximum.
In the Gehrke and King wound graft prosecution, the indictment charged conspiracy to commit health care fraud and wire fraud. Restitution exceeded $1.2 billion. In the Done Global prosecution, the government charged conspiracy to distribute controlled substances, substantive distribution counts, and conspiracy to commit health care fraud. The Schena prosecution added EKRA charges. The Ali indictment charged health care fraud based on the exploitation of substance abuse patients through sham clinics. Each of these cases layers multiple statutes targeting the financial structure, the clinical conduct, and the referral arrangements.
Defense Considerations for Individuals Facing Strike Force Investigations
The Data Analytics Problem
Data analytics are investigative tools, not proof of fraud. A statistical outlier is not a criminal. The billing volume that flagged a provider may reflect a legitimate practice with a high-acuity patient population, a geographic concentration of underserved patients, or coding patterns that are aggressive but defensible. The limitations of statistical outlier analysis are well-known inside the Fraud Section: the methodology depends on benchmark populations and comparison groups that can be challenged on cross-examination and through expert testimony.
The Cooperating Witness Problem
Every major Strike Force prosecution relies on cooperating witnesses. Those witnesses cooperate because they face their own criminal exposure and receive sentencing benefits in exchange for testimony. That incentive structure creates bias. A cooperator who claims the defendant directed the fraud must be tested on what the cooperator actually observed versus what the cooperator inferred, reconstructed, or was told by agents. A billing clerk who coded claims may have done so based on her own understanding of billing rules, not based on a directive from the physician or owner. That distinction is the difference between a conviction and an acquittal on the health care fraud counts.
The Parallel Proceeding Trap
Statements made in response to CMS audits, HHS-OIG subpoenas, compliance questionnaires, and administrative inquiries are generally admissible in a parallel criminal proceeding. There is no privilege. There is no immunity. The coordination between CMS, HHS-OIG, and Strike Force prosecutors is now formalized. A CMS payment suspension or OIG inquiry often signals that a criminal investigation is active or under consideration. Any response to a government inquiry must be evaluated for its criminal implications before it is submitted. For a detailed analysis of this risk, see our analysis of Operation Never Say Die.
The Loss Calculation Problem
The government’s loss figure determines the defendant’s sentencing exposure. Under the U.S. Sentencing Guidelines, the loss amount is the primary driver of the offense level. In Strike Force cases, the government typically calculates loss as the total amount billed to federal health care programs, not the amount actually paid. That methodology treats every claim in the indictment as entirely fraudulent. It does not distinguish between claims for services that were medically unnecessary and claims for services that were legitimate but billed incorrectly, coded aggressively, or supported by a clinical judgment the government disputes in hindsight. In the Gehrke and King wound graft prosecution, the government calculated a loss of $1.2 billion. In the Ali indictment, the figure is $650 million. These numbers produce offense levels at the top of the Guidelines table. Challenging the loss calculation by identifying claims that involved legitimate services, defensible coding, or good-faith clinical disagreements directly reduces the offense level and the resulting Guidelines range.
Frequently Asked Questions
What is the West Coast Health Care Fraud Strike Force and which federal districts does it cover?
The West Coast Health Care Fraud Strike Force is a multi-district federal enforcement initiative announced on April 30, 2026, by DOJ’s National Fraud Enforcement Division. It covers the District of Arizona, the District of Nevada, and the Northern District of California. The Strike Force unites DOJ’s Health Care Fraud Section with the U.S. Attorney’s Office in each district. It is led by Health Care Fraud Chief Jacob Foster and Acting Assistant Chief Gary Winters. Federal partners include the HHS Office of Inspector General, FBI, and DEA. The Strike Force model nationally has produced the prosecution of over 6,200 defendants who collectively billed Medicare, Medicaid, TRICARE, and private insurers more than $45 billion.
How does DOJ build a federal health care fraud investigation before an indictment?
Strike Force investigations typically begin with the DOJ Health Care Fraud Data Fusion Center, which combines CMS billing data with HHS-OIG investigative data and AI-driven analytics to flag billing outliers. Once flagged, the investigation may proceed through UPIC audits, grand jury subpoenas for billing records, clinical documentation, and financial records, covert search warrants for email and encrypted messaging applications, FBI and HHS-OIG witness interviews, and the development of cooperating witnesses who may make recordings at the direction of federal agents. These investigative steps typically span months or years. The individual under investigation may not know the investigation exists until a grand jury subpoena arrives or a search warrant is executed.
Can statements made to CMS or HHS-OIG during an audit be used in a parallel criminal investigation?
Yes. Statements made in response to CMS audits, HHS-OIG subpoenas, UPIC prepayment review requests, compliance questionnaires, and administrative inquiries are generally admissible in a parallel federal criminal proceeding. There is no privilege protecting these statements absent a specific grant of immunity or other negotiated protection. The coordination between CMS, HHS-OIG, and Strike Force prosecutors is formalized under the West Coast Strike Force structure. A CMS payment suspension under 42 C.F.R. section 405.371 or an OIG Civil Investigative Demand often indicates that a criminal investigation is active or under consideration.
What is the Eliminating Kickbacks in Recovery Act (EKRA) and how does it differ from the Anti-Kickback Statute?
The Eliminating Kickbacks in Recovery Act (EKRA), 18 U.S.C. section 220, criminalizes kickbacks involving patients of recovery homes, clinical treatment facilities, and laboratories. Unlike the Anti-Kickback Statute, 42 U.S.C. section 1320a-7b, EKRA applies to payments from private insurers, not just federal health care programs like Medicare and Medicaid. The Ninth Circuit addressed EKRA’s scope in United States v. Schena, No. 23-2989 (9th Cir. 2025), a prosecution DOJ identifies in the West Coast Strike Force announcement. EKRA carries up to 10 years per count and fines up to $200,000. The Ninth Circuit’s interpretation controls in every federal court in Arizona, Nevada, and Northern California.
What federal charges and sentences do individuals face in wound care fraud and wound graft fraud prosecutions?
Federal wound care fraud prosecutions target clinic owners, sales representatives, wound graft distributors, and nurse practitioners involved in medically unnecessary wound graft applications and kickback-driven referral arrangements. The government charges health care fraud under 18 U.S.C. section 1347 (up to 10 years per count), wire fraud under 18 U.S.C. section 1343 (up to 20 years), and Anti-Kickback Statute violations (up to 10 years). In the District of Arizona prosecution of United States v. Gehrke and King, the defendants received sentences of 15.5 and 14 years in federal prison with combined restitution exceeding $1.2 billion. Scott Armstrong tried nine healthcare fraud jury trials at DOJ’s Fraud Section in cases involving over $600 million in false claims. He now represents individuals in federal wound care fraud investigations and prosecutions.
How does DOJ prosecute telehealth fraud and illegal Adderall distribution through digital health platforms?
The Done Global prosecution in the Northern District of California established that digital health platforms face criminal liability under 21 U.S.C. section 841 when controlled substances are dispensed without legitimate medical purpose. The government’s theory was that the platform distributed over 40 million Adderall pills by capping clinical discretion, prohibiting follow-up care, and using auto-refill technology that generated prescriptions without clinical interaction. The CEO and clinical president were convicted of conspiracy to distribute controlled substances and conspiracy to commit health care fraud. Health Care Fraud Chief Jacob Foster, who prosecuted this case, now leads the West Coast Strike Force. Scott Armstrong served as lead trial counsel in the Fraud Section’s first use of data analytics to convict a physician for conspiring to dispense over 2 million controlled substance pills, and subsequently directed DOJ’s Appalachian Regional Prescription Opioid Strike Force, leading investigations involving the diversion of over 15 million pills.
How does the government calculate loss amount and sentencing exposure in a federal health care fraud case?
Under the U.S. Sentencing Guidelines, the loss amount is the primary driver of the offense level in a health care fraud sentencing. The government typically calculates loss as the total amount billed to Medicare, Medicaid, or other federal health care programs, not the amount actually paid. The distinction between intended loss and actual loss is significant. In the Gehrke and King wound graft prosecution, the loss figure was $1.2 billion. Claims involving legitimate services, coding disputes, or good-faith clinical disagreements can be excluded from the loss calculation at sentencing, which directly reduces the offense level and the resulting Guidelines range.
What experience does Armstrong & Bradylyons PLLC have defending federal wound care fraud, controlled substance diversion, and digital health platform fraud cases?
Scott Armstrong tried nine healthcare fraud jury trials at DOJ’s Fraud Section in cases involving over $600 million in false claims. He now represents individuals in federal wound care fraud investigations and prosecutions. He served as lead trial counsel in the Fraud Section’s first use of data analytics to convict a physician for conspiring to dispense over 2 million controlled substance pills, and subsequently directed DOJ’s Appalachian Regional Prescription Opioid Strike Force, leading investigations involving the diversion of over 15 million pills. Drew Bradylyons supervised the Healthcare Fraud Unit’s South Florida Strike Force docket and investigated cases involving more than $1 billion in fraudulent claims to Medicare, Medicaid, and TRICARE. Special Counsel Andrea Savdie served for four years as a Trial Attorney in the Healthcare Fraud Unit at the Miami Strike Force. The firm defends individuals in every Strike Force district, including cases involving digital health platform fraud.
Facing a Federal Health Care Fraud Investigation or Indictment?
Armstrong & Bradylyons PLLC defends physicians, clinic owners, billing companies, digital health executives, and healthcare professionals in federal health care fraud investigations and prosecutions nationwide. The firm provides trial-ready defense in every Strike Force district, including the new West Coast Strike Force covering Arizona, Nevada, and Northern California.
