DOJ targets healthcare fraud in California, Arizona, Nevada

By Zachery Schmidt
The Center Square

The U.S. Department of Justice has created a new task force to fight healthcare fraud in three Western states.

The West Coast healthcare Fraud Strike Force will focus on California, Arizona and Nevada.

Assistant Attorney General Colin McDonald of the DOJ’s Fraud Division said data shows the states have seen a “significant and accelerating increase in healthcare fraud.”

“The Fraud Division is committed to bringing that same relentless, data-driven prosecutorial force to bear across every corner of this region, making unmistakably clear that no scheme is too sophisticated, no network too large or small, and no fraudster too distant to escape federal accountability,” McDonald noted.

Scott Lampert, the U.S. Department of Health and Human Services’ acting deputy inspector general for investigations, said “emerging threats” across Arizona, California and Nevada are “targeting billions of taxpayer dollars from federal healthcare programs.”

“Many of these schemes are driven by sham operations designed to appear legitimate while exploiting patients and inflating claims through increasingly sophisticated methods,” he added.

Timothy Courchaine, U.S. attorney for the District of Arizona, said, “Federal law enforcement and the United States Attorney’s Office have disrupted fraud schemes worth over a billion dollars of taxpayer money” in the state.

Courchaine said the mission of the task force is to “ensure Americans who need critical services are not used as pawns to make bad actors rich.”

“Through excellent investigations, trial work and seizures of ill-gotten gains, the District of Arizona will continue safeguarding those services,” he added.

Attorney General Kris Mayes told The Center Square via email that “Arizona has been on the front lines of fighting Medicaid fraud for the past several years, and we welcome the federal government’s help in combatting this problem.”

She highlighted a 2023 case where $2.5 billion of taxpayer money was stolen from the state’s Medicaid program by directing Native Americans to unlicensed or fraudulent sober living homes that then billed the state for inadequate services or services that never occurred.

The state recovered only $125 million, or 5% of the $2.5 billion in taxpayers’ money lost to the fraud scheme, according to the Arizona Center for Investigative Reporting.

Last year, Mayes announced a $6 million grant program to help tribal nations affected by the healthcare fraud scheme.

Since 2023, the Democratic attorney general said her office has “indicted 166 individuals and entities, and recovered or seized more than $139 million in cash and assets.”

“We are not done. To anyone committing healthcare fraud in Arizona: We will find you, and we will hold you accountable,” she noted.

In June 2025, Farrukh Jarar Ali, the owner of a Pakistan-based company, was charged with conspiracy to commit healthcare fraud and wire fraud, as well as wire fraud and money laundering after allegedly billing around $650 million to Arizona’s Medicaid program through at least 41 substance abuse treatment clinics in the state.

Six months later, Arizonans Alexandra Gehrke and Jeffrey King were sentenced to 15.5 years and 14 years in prison, respectively, for causing more than $1.2 billion of false or fraudulent Medicare and health insurance claims for medically unnecessary wound grafts, the DOJ said.

Gehrke and King submitted these false claims between November 2022 and May 2024, the DOJ noted.

In California, Silicon Valley is “ground zero for technology-driven healthcare fraud schemes that seek to cheat taxpayer-funded programs like Medicare,” according to Craig Missakian, U.S. attorney for the Northern District of California.

To illustrate, last year a Silicon Valley-based digital health company saw its CEO, Ruthia He, and its clinical president, David Brody, convicted of carrying out a scheme involving more than $100 million in healthcare fraud that distributed Adderall over the internet.

In April, the California Department of Justice charged 21 suspects for allegedly defrauding the state’s Medicaid program of $267 million through a hospice fraud scheme.

Also last month, Nevada Attorney General Aaron Ford charged two Nevadans, Lawrence Carter and Leasa Carter, with allegedly defrauding Nevada’s Medicaid program of at least $2 billion.

“These charges reflect a serious breach of trust and an alleged scheme that exploited both Medicaid and vulnerable individuals,” said Ford.

“Our Medicaid Fraud Control Unit works every day to uncover this kind of misconduct and ensure those responsible are brought to justice,” the Democratic attorney general said.

The Center Square reached out to Ford’s office for further comments, but did not receive a response before press time.