AI Enforcement Is Here: Are You Ready?

IMC Board
Mar 4
7 min read

The federal government has a new investigative partner, and it never sleeps.

Key Takeaways

Record recoveries—The DOJ recovered more than $6.8 billion through False Claims Act (FCA) settlements and judgments in fiscal year 2025, the highest annual total in the statute's history.
AI is now a core enforcement tool—Federal prosecutors used artificial intelligence in 315 cases in 2025, a 31% increase from the prior year, enabling investigators to identify billing anomalies at unprecedented scale.
Scrutiny is expanding—Enforcement now extends to Medicare Advantage coding practices, diagnostic and lab billing, durable medical equipment, ambulatory surgery center joint ventures, and post-acute care providers.
Compliance costs are climbing—Health systems and insurers are absorbing sharply higher legal and investigation expenses, with one major hospital chain reporting an 83% year-over-year increase in litigation-related costs.
Insurance carriers face dual exposure—As both targets and potential allies of federal enforcement, carriers and agents must align their own compliance practices with the government's evolving AI-driven standards.

New Investigative Playbook

If your organization has been relying on "we've never had a problem before" as a compliance strategy, 2026 is a good time to update that plan.

Federal fraud enforcement has entered a new phase defined by proactive, AI-powered data surveillance. The Department of Justice (DOJ), the Department of Health and Human Services (HHS), and the U.S. Centers for Medicare and Medicaid Services (CMS) are deploying machine learning and predictive analytics to identify outliers in billing, coding, and claims data before investigators even pick up the phone. For insurance carriers, agents, and digital marketers operating in the health care space, this shift carries real consequences that go well beyond the providers in the headlines.

By the Numbers: Enforcement Has Never Looked Like This

The scale of federal health care fraud enforcement in fiscal year 2025 was unprecedented. Total FCA recoveries exceeded $6.8 billion across all sectors. More than $5.7 billion of that was tied directly to health care fraud, the largest share ever recorded under the statute. Federal prosecutors independently initiated 183 of the 641 fraud cases filed that year, more than double the prior year's count.

The DOJ used AI and advanced analytics in 315 investigations in 2025 alone. That was a 31% jump over 2024. And in June 2025, a single enforcement takedown charged 324 defendants in schemes totaling more than $14.6 billion in intended losses, marking the debut of DOJ's Health Care Fraud Data Fusion Center, which harnesses cloud computing, artificial intelligence, and advanced analytics to proactively surface emerging fraud patterns.

This is a structural shift in how the government does its job.

What Changed: From Reactive to Predictive

For most of the FCA's history, federal investigators waited for someone to come forward. Whistleblowers often initiated the vast majority of cases. That dynamic still matters. In fiscal year 2025, whistleblower-initiated cases drove more than $5.3 billion of all FCA recoveries. But the government is no longer waiting at the door.

AI and machine learning have given federal prosecutors the ability to mine massive claims datasets, flag statistical outliers, and identify patterns that no human auditor could detect at scale. Investigators can now isolate clusters of suspicious activity, such as a single provider billing millions for telehealth services within days or medical equipment suppliers shipping to nonexistent addresses, and deploy enforcement resources accordingly.

The practical result for health care organizations is more civil investigations, more subpoenas, and more scrutiny of billing and coding trends, even in the absence of a whistleblower. Compliance officers can no longer afford to assume that flying under the radar is a protection. The radar is now everywhere.

New Infrastructure: The Architecture of Enforcement

The government has rebuilt its enforcement architecture.

Several key initiatives launched over the past year have fundamentally changed the landscape:

National Fraud Enforcement Division—Created by the White House in January 2026, this DOJ division centralizes coordination across multiagency, multidistrict fraud investigations with a specific focus on federal health care programs.
False Claims Act Working Group—Launched jointly by the DOJ and HHS, this group formalizes cross-agency coordination between federal prosecutors, the HHS Office of Inspector General (OIG), and CMS, signaling deeper data sharing and broader theories of liability.
CRUSH Initiative—CMS's Comprehensive Regulations to Uncover Suspicious Health Care (CRUSH) program adds another layer of real-time monitoring to Medicare, Medicaid, and other federal health programs.
Health Care Fraud Data Fusion Center—A new DOJ-operated center that uses AI, cloud computing, and advanced analytics to revolutionize how the government detects and prosecutes fraud schemes, including Medicare Advantage coding abuse.

Together, these efforts represent a government approach that is more coordinated, more technologically capable, and more proactive than anything that preceded it.

Who's in the Crosshairs: What Carriers and Agents Need to Know

Federal enforcement priorities in 2025 covered a broad swath of the health care ecosystem. Organizations operating across these sectors should take note:

Medicare Advantage coding—The DOJ flagged anomalous billing patterns using AI, revealing what it characterized as systemic abuse of Medicare Advantage risk adjustment codes, particularly in Texas, Arizona, and Michigan. Carriers administering Medicare Advantage plans have already appeared in major enforcement actions, and the scrutiny is intensifying.
Diagnostic and laboratory billing—Overly aggressive diagnostic coding and lab billing practices remain a top target for federal prosecutors, who are using data analytics to identify patterns that deviate from statistical norms.
Ambulatory surgery centers and joint ventures—Prosecutors are drilling down on financial relationships between physicians and hospitals, particularly in ambulatory surgery center arrangements, for potential violations of the Stark Law and the Anti-Kickback Statute (AKS).
Durable medical equipment—One enforcement action involved more than $10 billion in false claims using over 1 million stolen identities, billing Medicare for equipment that was never delivered.
Post-acute care—Coding patterns in skilled nursing, home health, and rehabilitation settings are under active review.
Telehealth—Relaxed documentation standards during the pandemic created openings for fraud that federal investigators are now actively closing.

For insurance carriers administering government health programs, this list provides a roadmap of where the government is already looking, and where exposure lives.

Hight Cost of Being Unprepared

Compliance is now much more than just a regulatory obligation.

Defending a fraud investigation can cost hundreds of thousands of dollars. Settlements can run tens of millions. Tenet Healthcare, a major hospital operator, reported $64 million in litigation and investigation costs in 2025, an 83% increase over the prior year. HCA Healthcare, the nation's largest hospital system, called out the FCA Working Group and intensified federal enforcement activities directly in its most recent annual financial report.

The cost of preparation is almost always lower than the cost of response.

For carriers and agents, compliance investment has to keep pace with government enforcement capability. That means moving beyond periodic audits and toward continuous monitoring frameworks. It means making sure that billing and coding practices can withstand algorithmic scrutiny. It also means treating compliance governance as a strategic function rather than a checkbox.

What Insurance Carriers and Agents Can Do Now

The government's use of AI to enforce fraud compliance is a strategic signal for insurers, agents, and digital health marketers.

Here's how to stay ahead of the curve:

Audit your AI systems now—If your organization uses AI in underwriting, claims processing, prior authorization decisions, or coding support, document how those systems work, what data they use, and how they're governed. Regulators and prosecutors are increasingly focused on whether AI creates or enables improper billing.
Build AI-specific compliance controls—Implement human-in-the-loop safeguards for AI-driven processes, especially those that touch claims adjudication, risk adjustment coding, or Medicare Advantage plan management. The DOJ has made clear that AI use will be scrutinized as part of corporate compliance evaluations.
Align with cross-agency data sharing—The government is increasingly sharing data across HHS, CMS, the FBI, and the DOJ. Your internal data governance needs to reflect that same level of coordination. Siloed compliance approaches won't hold up under integrated federal scrutiny.
Invest in real-time anomaly detection—AI-driven fraud detection tools that flag billing anomalies in real time are now table stakes. Carriers that continue relying on rules-based models or periodic manual reviews are falling behind both fraudsters and federal investigators.
Train compliance teams on AI literacy—Compliance officers need to understand what the rules are, and how AI identifies violations of those rules. Federal investigators are using machine learning to find outliers. Your compliance team should be asking the same questions of your own data.
Stay current on regulatory developments—The National Association of Insurance Commissioners (NAIC) is actively developing AI oversight frameworks, and at least 23 states have already adopted the NAIC's AI Model Bulletin. A model law governing third-party AI vendors is anticipated in 2026. Monitor these developments closely, particularly if you operate across multiple states.

What Digital Marketers Should Understand

Health care digital marketers have a less obvious but real stake in this enforcement environment.

Campaigns that generate leads for Medicare Advantage plans, telehealth providers, durable medical equipment suppliers, or other government-program participants are operating in territory the federal government is actively monitoring. If your marketing activity contributes to enrollment or utilization patterns that later attract fraud scrutiny, the question of whether marketing materials were accurate, compliant, and nondeceptive becomes relevant.

The implications of certain referral arrangements, including those that may be embedded in affiliate or co-marketing structures, are also on the federal radar. Now is a good time to review how marketing partnerships are structured and whether any financial arrangements could be characterized as improper inducements under the AKS.

It's important to ensure that the programs you support are built on solid compliance foundations, because federal investigators are now capable of tracing the data all the way up and down the chain.

Sources:

Arnold & Porter: DOJ and HHS-OIG Report a Record Year of Enforcement, With Healthcare Fraud at the Center
Deloitte: Property and Casualty Carriers Can Win the Fight Against Insurance Fraud
Fenwick: Tracking the Evolution of AI Insurance Regulation
Modern Healthcare: Providers on defense as feds ramp up fraud enforcement, deploy AI
Modern Healthcare: White House announces healthcare fraud crackdown
U.S. DOJ Office of Public Affairs: False Claims Act Settlements and Judgments Exceed $6.8B in Fiscal Year 2025
White & Case: Healthcare Fraud Enforcement in 2025: A Year of Aggressive Action and Expanding Risk

Further Thoughts

The government's integration of AI into fraud enforcement is a permanent upgrade to federal investigative capability. The technology will only improve, the data pipelines will only grow, and the cross-agency coordination will only tighten.

For insurance carriers, agents, and digital health marketers, the most important takeaway may be this: the same AI tools the government is using to find fraud are available to organizations that want to prevent it.

The difference between being on the right side of an investigation and the wrong one often comes down to whether compliance was built into the process from the start, or bolted on after someone asked a question. In this environment, proactive compliance is your best protection.