A retiree opens her Medicare statement and finds a claim for hundreds of urinary catheters. She never ordered them. She has never heard of the supplier. And she is one of more than a million people it happened to.
That was Operation Gold Rush, announced by the Department of Justice in June 2025: $10.6 billion in fraudulent Medicare claims for catheters and other equipment, filed with the stolen identities of over one million Americans. It is the largest loss ever charged in a federal health care fraud case.
It was not a one-off. The 2026 National Health Care Fraud Takedown charged 455 defendants over $6.5 billion in alleged false claims, including a $3.7 billion scheme for equipment that was never provided. Durable medical equipment fraud is now an organized, data-driven business, and every organization that touches Medicare billing needs to know how it works.
What Durable Medical Equipment Fraud Looks Like
Durable medical equipment (DME) covers items such as wheelchairs, glucose monitors, orthotic braces, and catheters. The HHS Office of Inspector General (OIG) describes three recurring patterns:
- Billing for equipment never delivered, often using stolen beneficiary numbers
- Supplying equipment nobody needs, frequently after a telemarketing call offering “free” items
- Falsifying medical necessity with fake or improperly obtained documentation
The category is already error-prone. CMS reported a 24.1% improper payment rate for DME and related supplies in fiscal year 2025, about $2.3 billion, compared with 6.55% for Medicare fee-for-service overall. CMS is clear that this is not a fraud rate. But weak documentation is exactly where fraud hides.
The Three Ingredients Every Scheme Needs
An OIG white paper on durable medical equipment fraud reduces the problem to three things a fraudster must obtain. Each one is a control point.
| Ingredient | How fraudsters get it | Where you can stop it |
|---|---|---|
| A Medicare-enrolled supplier | Buying existing suppliers through straw owners | Ownership due diligence, monitoring of billing after a sale |
| A physician order | Kickbacks, pre-filled forms, telehealth sign-offs with no exam, stolen provider numbers | Order audits, monitoring where your clinicians’ identifiers appear |
| A patient’s Medicare number | Cold calls, “free brace” offers, purchased or stolen data | Patient education, access controls on eligibility lookups |
Remove any one and the claim cannot be filed.
Operation Gold Rush: Durable Medical Equipment Fraud at Scale
According to the Justice Department, a transnational organization sent straw owners to buy dozens of US medical supply companies. Those companies then submitted a flood of claims using stolen identities and medical information. Nineteen defendants were charged. Proceeds were moved through shell companies and cryptocurrency, a pattern we explain in how forensic accountants trace money through shell companies.
Two details matter for compliance teams.
First, the warning came from billing data. An association of accountable care organizations noticed that the number of Medicare beneficiaries billed for catheters jumped from about 50,000 a year to more than 450,000 in 2023. An outlier that large is visible to anyone who looks.
Second, patients noticed too. Medicare and its contractors received more than 400,000 complaints. Beneficiary complaints are evidence, not noise.
Durable Medical Equipment Fraud Red Flags for Audit Teams
Whether you run a practice, a health plan, a supplier, or a self-funded employer plan, watch for:
- A sudden spike in one product code from a new or recently sold supplier
- A change in ownership followed by a surge in billing
- Orders signed by practitioners with no treating relationship to the patient
- Telehealth orders with no record of a visit or examination
- Patients spread across many states, far from the supplier
- Missing proof of delivery
- Your own clinicians’ names on orders they do not recognize
Regulators treat durable medical equipment fraud as a priority. CMS imposed a six-month nationwide moratorium on new Medicare enrollment for certain DME supplier types from February to August 2026, and prosecutors now use data analytics to find billing outliers early. Our guide to what triggers a federal healthcare fraud investigation covers how those reviews begin.
What Your Organization Can Do Now
- Audit a sample of DME orders. Check for a valid written order, the required face-to-face encounter, documented medical need, and proof of delivery.
- Monitor provider identifiers. Ask clinicians to review reports of orders issued under their names.
- Vet suppliers and marketers. Be wary of per-order or per-lead payments, which are a classic kickback structure.
- Review ownership changes. Treat any newly acquired supplier in your network as higher risk.
- Educate patients and staff. Encourage people to read Medicare notices and to refuse unsolicited equipment.
- Give people a place to report. A working internal channel matters, as our post on building a whistleblower hotline explains.
- Escalate properly. Suspected fraud can be reported to the HHS-OIG hotline at 1-800-447-8477. See how to report healthcare fraud.
If the problem may be inside your own organization, preserve records first and follow a documented process. Our walkthrough of how healthcare fraud investigations work shows what to expect.
Conclusion
Durable medical equipment fraud depends on three things: a supplier, an order, and a patient identity. Organizations that guard all three, and that actually look at their billing data, are far harder to exploit.
If you have seen warning signs of durable medical equipment fraud and need an independent review, FraudOrder can help you establish the facts. Visit fraudorder.co to start a confidential conversation.
Frequently Asked Questions
What counts as durable medical equipment?
Reusable medical items prescribed for home use, such as wheelchairs, glucose monitors, braces, and CPAP machines. Medicare groups them with prosthetics, orthotics, and supplies such as catheters.
Is the improper payment rate the same as the fraud rate?
No. CMS states that the improper payment rate is not a fraud rate. Most errors involve missing or insufficient documentation, though fraud is one cause.
How do fraudsters get Medicare numbers?
Often through unsolicited calls or ads offering free equipment in exchange for a Medicare number. Stolen and purchased data are also used. OIG advises giving the number only to your own doctor’s office.
What should someone do if Medicare was billed for equipment they never received?
Review the notice, contact Medicare or the plan, and report it to HHS-OIG. It matters because a false claim for an item can lead to a later, legitimate claim being denied.
Can a legitimate provider be drawn into a durable medical equipment fraud case?
Yes. Provider identifiers can be stolen, and clinicians who sign orders without examining patients have been charged. Regular checks on how your identifiers are used reduce that risk.
When should we bring in outside investigators for suspected durable medical equipment fraud?
When the people who would review the issue are close to it, or when the findings may reach regulators or a court. Our guide on fraud investigation versus internal audit explains the difference.
References
- U.S. Department of Justice. (2026). 2026 National Health Care Fraud Takedown: Case Summaries. https://www.justice.gov/fraud/2026-national-hcf-case-summaries
- IRS Criminal Investigation. (2025). National health care fraud takedown results in 324 defendants charged in connection with over $14.6 billion in alleged fraud. https://www.irs.gov/compliance/criminal-investigation/national-health-care-fraud-takedown-results-in-324-defendants-charged-in-connection-with-over-14-point-6-billion-in-alleged-fraud
- Centers for Medicare & Medicaid Services. (2026). CMS Fraud Hot Spot: DMEPOS Suppliers. https://www.cms.gov/files/document/cms-fraud-hot-spot-dmepos-suppliers.pdf
- Centers for Medicare & Medicaid Services. (2025). Comprehensive Error Rate Testing (CERT). https://www.cms.gov/CERT/03_PADemo.asp
- HHS Office of Inspector General. (n.d.). Durable Medical Equipment: Protecting Medicare and Medicaid from Fraud, Waste, and Abuse. https://oig.hhs.gov/reports/featured/dme-feature/
- HHS Office of Inspector General. (n.d.). Fraud Alert: Nationwide Brace Scam. https://oig.hhs.gov/fraud/consumer-alerts/alerts/bracescam.asp
- HME News. (n.d.). OIG to CMS: Stronger fraud efforts are needed for DMEPOS. https://www.hmenews.com/article/oig-to-cms-stronger-fraud-efforts-are-needed-for-dmepos
- Sidley Austin. (2026). DOJ’s 2026 Health Care Fraud Takedown Highlights Increased Coordination and Data-Driven Enforcement. https://whitecollarwatch.sidley.com/2026/06/26/dojs-2026-health-care-fraud-takedown-highlights-increased-coordination-and-data-driven-enforcement/
- Womble Bond Dickinson. (2025). 2025 National Health Care Fraud Takedown Sets Record as Largest in U.S. History. https://www.womblebonddickinson.com/us/insights/federal-government/102l08i/2025-national-health-care-fraud-takedown-sets-record-as-largest-in-u-s-history
- Fierce Healthcare. (2024). What the alleged $2B Medicare catheter fraud scheme means for ACOs. https://www.fiercehealthcare.com/payers/giant-unknown-what-alleged-2b-medicare-catheter-fraud-scheme-means-acos
Disclaimer
This article is for informational purposes only and is not legal, financial, or professional advice. Reading it does not create a client relationship with FraudOrder. Allegations described in charging documents are not findings of guilt. Consult a qualified attorney or other professional about your specific situation. For questions about FraudOrder services, visit https://fraudorder.co/