Unsurprisingly, defense experts are also considering arguments that focus on the unknowns about how AI works and its potential to create misleading evidence and false "hits" in investigations.
"It kind of opens up a door into the unknown, both on the government side and defense-wise on what kind of arguments you can make to attack any enforcement action that the government brings," said Nora Becerra, a partner at K&L Gates LLP focused on healthcare.
Last week, U.S. Department of Justice officials announced the takedown of 324 alleged fraudsters charged in False Claims Act schemes totaling $14.6 billion.
The sprawling set of cases, the administration said, was made possible by cross-agency cooperation and extensive use of advanced digital tools through a newly established healthcare fraud "fusion" entity.
That center, officials say, will help them aggressively pursue more perpetrators seeking to steal federal dollars from America's healthcare system.
"What we're doing today is changing the paradigm, not just going after bad guys and putting them behind bars, but actually getting ahead of these schemes so the money never leaves our bank account," said Mehmet Oz, the administrator for the Centers for Medicare & Medicaid Services, at a press conference last week.
Legal experts say the high-profile use of AI and data tools raise a host of questions, including about patient privacy and ethical guardrails.
"There are going to be a lot of questions on how these tools are developed and how reliable they are," Becerra said.
A Sprawling Healthcare Takedown
The recent case is the most significant fraud enforcement in history in terms of dollar amounts, officials said, surpassing the previous record of $6.2 billion set in 2014.
The investigation includes 189 federal cases filed in 50 federal districts and 91 state lawsuits in 12 states. Ninety-six medical professionals, including doctors, pharmacists and nurse practitioners, are among the defendants.
The takedown was significant not only because of the large numbers, but also because of the many types of alleged fraud, according to Kate Driscoll, a partner at Morrison Foerster LLP, an expert in white collar defense, including the Anti-Kickback Statute and False Claims Act.
The government went after healthcare fraud that ran the "gamut" from telemedicine to genetic testing, to opioid and transnational schemes, she said.
"I was just struck by the breadth of the types of healthcare fraud that they were able to bring together in this takedown," she told Law360 Healthcare Authority.
Enforcement experts weren't surprised by the DOJ's focus on prosecuting healthcare fraud cases. The department has announced some of its busiest years in recent memory for FCA recovery. Prosecutors reported a $2.9 billion haul for January 2024, a 5% increase from the previous year.
"The announced DOJ healthcare fraud takedown is similar in many respects to the results announced in prior years," said Matthew M. Curley, a Bass Berry & Sims PLC attorney and co-chair of its healthcare fraud and abuse task force. "The results in terms of the number of defendants charged across the country and the nature of the alleged fraud schemes continue to reflect the DOJ's robust efforts in pursuing alleged healthcare fraud."
The Trump administration has also said it plans to "aggressively" pursue healthcare fraud, specifically targeting waste, fraud and abuse.
In May, the DOJ released a guidance memo stating that it plans to focus on healthcare fraud, particularly against federal health programs.
Last week, the department also announced the formation of a new working group tasked with concentrating on FCA enforcement, led by DOJ attorney Brenna Jenny, who co-founded the group during President Donald Trump's first administration.
The promotion of the healthcare fraud fusion center also caught the attention of the healthcare and defense bar.
According to the DOJ, the center will facilitate collaboration between Justice officials and the U.S. Department of Health and Human Services' Office of Inspector General and the FBI. It will also use cloud computing, artificial intelligence and data analytics, the department said.
"I think what we're seeing is the emphasis on using AI as another tool in the toolbox to address and eradicate fraud, waste and abuse in the healthcare system," said Phil Selden, a member of Cole Schotz PC's white collar investigations team who previously served as a federal prosecutor and as Acting U.S. Attorney for the District of Maryland.
Murky Waters
The use of AI holds significant promise for healthcare fraud investigators in identifying outliers in data that could indicate misuse of government funds, experts say.
The new reliance on AI will result in an uptick of cases generated from data alone, said Polsinelli PC shareholder Ellen Persons, as opposed to qui tam lawsuits.
"It is likely going to lead to, assuming they have the resources, an increase in healthcare fraud investigations that come straight from the analyzing of data, as opposed to whistleblower lawsuits or self-disclosures, or some of the more traditional ways that these cases are brought," she said.
The DOJ and HHS will use AI and data tools to identify odd patterns, according to Claire Sylvia, a partner at Phillips & Cohen LLP and an expert on the False Claims Act. The government spends a significant amount of money on federal healthcare programs, such as Medicare and Medicaid, and it's challenging to detect fraud.
These new tools hold promise for the difficult task of detecting fraud early and establishing a more proactive approach to enforcement, according to experts.
One example would be a particular provider or facility overusing or billing for a specific good or service that appears to be an outlier in the sector, rather than waiting for a whistleblower to come forward in the future, after the government has already spent the money.
Bass Berry's Curley said the DOJ has long used data analytics to detect and investigate potential healthcare fraud. He expects the continued rollout of AI in enforcement to be rapid.
"It certainly would seem that artificial intelligence will enhance the effectiveness of those tools and perhaps assist the DOJ in spotting fraud earlier with respect to particular schemes and help the DOJ identify other areas of vulnerability that may not have been a traditional focus of their enforcement efforts," he said.
How that plays out in litigation is another question. While the government can identify issues in the data, it will still rely on people to tell the story of what's happening in the data.
"Statistics can identify patterns. It can't tell you what is actually happening," she said. Law enforcement personnel and whistleblowers will still play an essential role in healthcare fraud investigations.
The evolution to AI-powered investigation promises to open the door to data security and privacy problems.
"With the implementation of AI, confidentiality is a huge concern, especially in the healthcare context where patient and billing data is at issue," said Jessica Sievert, a partner at Holland & Knight LLP who previously investigated and litigated healthcare fraud cases for the DOJ.
While some think the tools will be rolled out quickly, Sievert said it will take time for the government to figure out how to solve these issues before they hurt investigations or put cases at risk.
"The tools have incredible potential to root out fraud, but I would expect a slow implementation across the government as a result of the confidentiality concerns," she added.
The Federal Plan to Use AI
The healthcare takedown defendants include two foreign marketing organizations accused of obtaining Medicare beneficiaries' information through deceptive marketing practices, then using AI to make fake recordings of those beneficiaries in which they agreed to receive specific medical products.
Due to these kinds of threats and others, healthcare systems and companies should continue to shore up data security, according to a client alert from the law firm Womble Bond Dickinson.
"These actions underscore the need for healthcare companies to ensure their cybersecurity measures are robust," the alert said.
Megan Mocho, a partner at Holland & Knight, said she's advising clients to collect and analyze data not only because of the potential threats, but also to stay on top of compliance as HHS and the DOJ are actively examining provider data.
"It creates almost an enhanced obligation for clients to consider use of AI in their data analytics so that they too can be on top of compliance in a proactive way," she said.
It's unclear how the federal government used AI in the latest takedown. A spokesperson for the HHS-OIG said they couldn't share information due to "sensitivities" around their investigative tools and techniques.
"We often do not share this type of information because we are aware that the fraudsters are listening," the spokesperson said.
Morrison Foerster's Driscoll said that, due to the novelty of using AI in these investigations, how it will be presented as evidence in the courtroom has yet to be determined.
"It is going to become more and more complex, both the schemes that are being created and how evidence is used," Persons said.
--Additional reporting by Gianna Ferrarin. Editing by Haylee Pearl.
Clarification: This article has been updated to clarify that Phil Selden previously served as the Acting U.S. Attorney for the District of Maryland.
For a reprint of this article, please contact reprints@law360.com.