Monthly Spotlight on Fraud, Waste, and Abuse

The following cases highlight fraud, waste, and abuse (FWA) and serve as a reminder to uphold high ethical standards when providing patient care and services.

AG's Office Secures Indictments Against Peabody Alcohol and Drug Counselor and Her Businesses for More Than $850,000 in MassHealth Fraud

The Massachusetts Attorney General’s Office (AGO) recently announced that a woman and her two companies, Recovery Journey Service, Inc. (RJS) and RJ Recovery LLC (RJ Recovery), were indicted by a Statewide Grand Jury on multiple charges related to fraudulently billing MassHealth and MassHealth managed care entities for services they did not provide and for services that she and her companies were not qualified to render. The AGO alleges that, because of her conduct, MassHealth paid more than $853,790 for fraudulent services between February 2021 and July 2025. Each defendant is charged with one count of Medicaid False Claims, Medicaid Reverse False Claims, and Larceny Over $1,200.

The woman opened RJS and RJ Recovery in 2020 and 2022, respectively, to purportedly provide support and recovery services to individuals struggling with addiction. The AGO alleges that, despite advertising peer recovery coaching services, a service that is paid at a lower rate, she and her companies billed MassHealth for psychiatric, psychotherapy, and evaluation and management services, which are paid at a higher rate. The AGO also alleges that, in many cases, these services were not rendered, including during times when there were no licensed clinicians on staff to perform these types of services. 

The AGO further alleges that she used the National Provider Identification (NPI) numbers of other licensed providers who no longer worked at RJS and RJ Recovery on claims she submitted to MassHealth for services not provided. In using licensed providers’ NPI numbers, the AGO alleges that she knew that she was not entitled to the payments she received from MassHealth, yet she never disclosed this information to MassHealth or returned the money.

The AGO’s Medicaid Fraud Division is a Medicaid Fraud Control Unit, annually certified by the U.S. Department of Health and Human Services to investigate and prosecute healthcare providers who defraud the state’s Medicaid program, MassHealth. The Medicaid Fraud Division also has jurisdiction to investigate and prosecute complaints of abuse, neglect, and financial exploitation of residents in long-term care facilities and of Medicaid patients in any healthcare setting. Individuals may file a MassHealth fraud complaint or report cases of abuse or neglect of Medicaid patients or long-term care residents by visiting the AGO’s website. 

The Massachusetts Medicaid Fraud Division receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $6,458,176 for federal fiscal year 2026. The remaining 25 percent, totaling $2,152,724 for FY 2026, is funded by the Commonwealth of Massachusetts.

These charges are allegations only, and the defendant is presumed innocent until proven guilty.

Source: AG's Office Secures Indictments Against Peabody Alcohol and Drug Counselor and Her Businesses for More Than $850,000 in MassHealth Fraud. (2026, February 2). www.mass.gov

Attorney General Bonta Announces Seven Arrests for Hospice Fraud: My Office Is on It!

California Attorney General Bonta announced the arrests of and filing of multiple felony charges against seven individuals for hospice fraud in Monterey County. Among the individuals arrested is the owner of Compassionate Touch Hospice and Spiritual Touch Hospice, two co-owners of Fountain Hospice, three doctors, and one nurse. The arrest and charges are the result of investigations by the California Department of Justice (DOJ) and the U.S. Department of Health Service Office of the Inspector General.

DOJ received a referral from the California Board of Registered Nursing after fraudulent activity was discovered and associated with Spiritual Touch Hospice and Compassionate Touch Hospice. DMFEA’s multi-year investigation revealed a sophisticated conspiracy to defraud Medi-Cal and Medicare and involved the owners, doctors, and nurses of Spiritual Touch Hospice, Compassionate Touch Hospice, and Fountain Hospice. The defendants owned, operated, or worked for the three hospice companies simultaneously. They recruited, enrolled, and certified patients for hospice services who did not suffer from a terminal diagnosis. Some of these patients did not know hospice was intended for patients who were terminally ill, or that they were even enrolled in hospice. To avoid suspicion, the defendants transferred several patients between the three companies after six months and continued fraudulently billing for hospice services.

The total loss to Medi-Cal and Medicare is $3,211,419.79. On January 30, 2026, DMFEA filed felony charges in Monterey County Superior Court against a head nurse, three medical directors, and three owners, alleging violations of false or fraudulent claims, conspiracy to commit a crime, with an aggravated white-collar enhancement.

The DMFEA is a California Department of Justice unit whose mission is to protect citizens and the state’s medical program from those who defraud taxpayers and divert state healthcare resources. The investigation would not have been possible without the collaboration of government agencies and those who reported the incidences of Medi-Cal fraud. If you suspect Medi-Cal fraud or elder abuse, you can report the incident at https://oag.ca.gov/dmfea/reporting.

It is important to note that a criminal indictment contains charges that are only allegations against a person. Every defendant is presumed innocent until proven guilty.

Source: Attorney General Bonta Announces Seven Arrests for Hospice Fraud: My Office Is on It! (2026, February 5). https://oag.ca.gov/

St. Margaret’s Center Pays $1.3 Million Under the False Claims Act

A nursing home that provides services to chronically ill and disabled children admits that care did not consistently meet federal and state standards.

First Assistant United States Attorney Sarcone III announced that the Center for Disability Services Holding Corporation, d/b/a St. Margaret’s Center (SMC), a skilled nursing facility located in Albany, New York, has agreed to pay $1,300,000 to resolve allegations that it violated the False Claims Act by billing for care that was worthless and falsely attesting that it had implemented a compliance program that promoted quality care.

This settlement resolves allegations that between January 1, 2018, and December 31, 2023, SMC provided care that was grossly substandard and therefore worthless.  During this time, New York State surveys, or inspections, revealed that SMC did not consistently provide sufficient nursing staff, ensure that residents were free of significant medication errors, or provide respiratory and tracheostomy care and suctioning. During one such survey, the New York State Department of Health (NYSDOH) determined that SMC failed to adequately supervise three residents, jeopardizing their health or safety.  NYSDOH placed SMC into “immediate jeopardy” status for over a month in 2022. Based on NYSDOH’s findings, the Centers for Medicare and Medicaid Services placed SMC on its Special Focus Facility list which identifies nursing homes throughout the United States that have a history of serious quality issues.

As a condition of receiving federal and state Medicaid dollars, SMC annually certified that it adopted and implemented an effective compliance program that addressed quality of care. SMC admitted that its compliance program failed to meet the statutory compliance program requirements. For example, SMC’s compliance officer admitted under oath that they had “no idea” how to identify potential compliance risks associated with caring for medically fragile infants and children and was unaware that SMC had been placed in “immediate jeopardy” status by NYSDOH.  SMC’s compliance program did not include quality of care as a potential risk area until March 2023, after the government investigation in this matter had commenced. 

Contemporaneously with the settlement announced recently, SMC agreed to enter into a quality-of-care Corporate Integrity Agreement with the United States Department of Health and Human Services, Office of Inspector General (HHS-OIG), which will remain in effect for five years and address quality of care and resident safety within SMC. 

The settlement resolves a whistleblower lawsuit filed under the qui tam provisions of the False Claims Act by two former SMC employees. The Act allows private persons to file civil actions on behalf of the government and share in any recovery. Under the settlement, the whistleblowers will receive approximately $247,000 of the settlement proceeds.

Source: (St. Margaret’s Center Pays $1.3 Million Under the False Claims Act. (2026, February 12). www.justice.gov

Highland Physician Sentenced to 97 Months in Prison

An Indiana woman was sentenced after pleading guilty to healthcare fraud. The female physician was sentenced to 97 months imprisonment, followed by one year of supervised release, and ordered to pay $19,138,245.43 in restitution. As part of her plea agreement, she was required to forfeit significant assets, including jewelry, vehicles, musical instruments, and the contents of several bank accounts. She also agreed to sell real estate and other luxury assets purchased using the proceeds of her crime to fulfill her obligations to repay the fraudulently obtained funds.

According to documents in the case, as the physician, and the sole owner of the Center for Otolaryngology and Facial Plastic Surgery in Highland, Indiana, she billed Medicare and private insurance for thousands of balloon sinuplasty procedures that she did not perform.  A balloon sinuplasty is a procedure designed to treat chronic sinusitis by using a small, flexible balloon catheter to widen and drain blocked sinus passages. She sought approximately $50,000,000 for these non-existent procedures for which she was actually paid almost $20 million. Approximately $460,000 of the fraudulently obtained funds were paid by individual patients in the form of co-insurance payments.

Source: Highland Physician Sentenced to 97 Months in Prison. (2026, February 18). www.justice.gov

Source: Sonal Patel, BA, CPMA, CPC, CMC, ICDCM, is CEO and Principal Strategist at SP Collaborative, LLC.