Foreign-Linked Health Care Fraud Schemes Cost Taxpayers Millions in Hidden Fees

In a major crackdown on healthcare fraud, federal authorities have confirmed nearly $1 billion in losses from Medicare and Medicaid due to schemes linked to Russian and Armenian criminal networks, according to an investigation by Open the Books.

The confirmed losses, part of a Department of Justice operation dubbed “Operation Gold Rush,” represent a hidden cost of approximately $7 per American household, based on Federal Reserve data. However, authorities suggest the true scope of healthcare fraud may be significantly higher.

In June 2025, the Justice Department announced charges against members of a transnational crime organization that had submitted a staggering $10.6 billion in fraudulent billings through acquired medical supply companies. While authorities blocked most payments, the group successfully extracted $941 million from federal programs—$900 million from Medicare supplemental insurers and $41 million directly from Medicare.

Despite efforts to recover these funds, law enforcement has seized only about $27.7 million, less than 3% of what was paid out.

The case forms part of what federal officials call the largest healthcare fraud investigation in Justice Department history. The operation led to indictments against 11 members of a transnational criminal organization that purchased dozens of durable medical equipment (DME) companies and submitted false Medicare claims using the stolen identities of more than one million Americans across all 50 states.

Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz highlighted the issue in January 2026, alleging that approximately $3.5 billion in unconfirmed fraud is occurring through false hospice billings in Los Angeles County, which he described as the “epicenter for health care fraud in America.”

Oz specifically pointed to the Van Nuys neighborhood, where he claimed a four-block area contains 42 hospices, many allegedly connected to what he called the “Russian Armenian mafia.” If these allegations prove correct, they would represent nearly $26 per household in wasted tax money.

“This is an organized crime, you know, mafia deal,” Oz stated. “You’ve got folks who are systemically recruiting doctors to write false prescriptions, you know, hundreds of doctors participating. They’ve got a hundred thousand patients who they’ve tricked or paid to give them their beneficiary numbers so they can perpetuate the fraud.”

Such claims have had unintended consequences. A family-owned bakery, Sherman Way Marketplace, whose storefront appeared in the background of Oz’s video post, reported a 30% drop in customer traffic despite having no connection to the allegations.

Data analysis by Open the Books reveals the potential scale of healthcare billing in California. Between 2018 and 2024, California billed over $127 billion to Medicaid, with Los Angeles County accounting for more than $20 billion. In Van Nuys alone, businesses billed Medicaid nearly $917 million during this period.

Key billing codes specifically for hospice care (G0299 and G0300) accounted for over $822 million in California Medicaid claims during the same period. Meanwhile, durable medical equipment billing—the focus of Operation Gold Rush—totaled more than $807 million in California, with monthly billings peaking at over $13 million in March 2024.

Medicaid spending in California has surged 147% in recent years, while billing in Van Nuys specifically jumped 85% from $90 million in 2018 to $167 million in 2024.

This isn’t the first time Russian connections to healthcare fraud have surfaced. In 2013, 49 defendants—all current or former Russian diplomats or their spouses—were criminally charged for a nine-year scheme to fraudulently obtain nearly $500,000 in Medicaid benefits. The defendants underreported their incomes to qualify for benefits, even submitting falsified documents signed by employees of Russian diplomatic missions.

The defendants reportedly celebrated their scheme with luxury shopping sprees at high-end retailers including Tiffany & Co., Jimmy Choo, Prada, and Burberry. In one instance, a $8,400 purchase from Apple in 2012 (equivalent to about $11,700 today) represented what would cover two to three months of basic living expenses for the average American household.

Prosecution efforts were complicated by diplomatic immunity, with authorities ultimately resorting to expulsion rather than incarceration for the 11 defendants who remained in the United States at the time.

The federal government’s broader anti-fraud initiative, the National Health Care Fraud Takedown, has charged 324 individuals with various schemes totaling $14.6 billion in “intended loss,” with 29 defendants specifically linked to transnational criminal organizations that allegedly submitted over $12 billion in fraudulent claims.

These combined cases of alleged fraud represent a potential exposure of nearly $109 in wasted tax dollars per American household, highlighting the significant financial impact of healthcare fraud on taxpayers nationwide.