DOJ's New National Fraud Enforcement Division Prioritizes Healthcare, Telemedicine, and Controlled Substances

What this means for your practice

This development signals a significant increase in federal scrutiny for healthcare businesses, including telehealth brands, medspas, dental practices, and chiropractic offices. The new division's increased headcount and 'lean, flat, and agile' structure mean more investigations, opened faster, and backed by better data analytics. Practices should immediately revisit their compliance programs, especially regarding billing practices, Anti-Kickback Statute (AKS) and Stark Law exposure, and all aspects of their telehealth arrangements. The explicit mention of telemedicine and controlled substance diversion necessitates a robust review of prescribing protocols and documentation for these services to mitigate heightened enforcement risk.

The Department of Justice (DOJ) has announced the creation of its new National Fraud Enforcement Division, marking a substantial investment in federal resources dedicated to combating fraud nationwide. This new division, which is rapidly scaling up its operations, has laid out its key enforcement priorities, with the healthcare sector receiving particular emphasis.

Formation of the National Fraud Enforcement Division

Created earlier this year, the National Fraud Enforcement Division is set to significantly expand its operational capacity. According to a memo issued by Assistant Attorney General Colin M. McDonald on August 13, 2026, titled 'The Fraud Division’s Enforcement Priorities,' the division's headcount is projected to reach approximately 500 attorneys and staff by August 24, 2026, with further growth anticipated over the next two years. The division is structured into specialized sections covering areas such as healthcare fraud, public trust/financial integrity, tax, global trade, and corporate enforcement, supported by dedicated asset recovery, data science, and litigation support teams.

The memo emphasizes that the division's design goal is to be 'lean, flat, and agile,' aiming for fewer bureaucratic layers to expedite prosecutorial decisions. This organizational structure, coupled with substantial resource allocation, indicates a strategic move by the DOJ to enhance its investigative and enforcement capabilities, promising more investigations initiated more quickly, supported by advanced data analytics.

Five Key Enforcement Priorities

The memo outlines five primary areas of focus for the National Fraud Enforcement Division:

1. Public Trust and Financial Integrity

This priority targets government procurement fraud, including bid rigging, defective pricing, self-dealing, and bribery. It also encompasses fraud within benefit and grant programs, such as those related to student loans, veterans’ benefits, disaster relief, and small business initiatives. Organizations involved in federal contracts or federally funded programs should anticipate increased scrutiny.

2. Healthcare

Healthcare continues to be the most targeted industry for enforcement actions, regularly accounting for over 80% of all False Claims Act judgments and settlements. The new division sharpens this focus, specifically highlighting:

• Telemedicine: Enforcement efforts will target fraudulent schemes involving the provision of healthcare services via telehealth platforms.
• Medicare and Medicaid Billing: Continued emphasis on combatting fraudulent billing practices within these critical federal programs.
• Controlled Substance Diversion: Investigations into the unlawful distribution and diversion of controlled substances.
• Home Health and Hospice Arrangements: Scrutiny of fraud within these specific care sectors.

The memo indicates that while these areas are not new to enforcement efforts, the division will allocate more resources and tools to the successful Health Care Fraud Strike Force model, which is expected to result in a greater volume of investigations.

3. Internal Revenue

Criminal tax enforcement is integrated into the division’s mandate, targeting unethical tax return preparers, individuals concealing income, and promoters of abusive tax shelters. The division intends to foster closer coordination between tax and other fraud investigations, aiming for an 'all-tools response' to fraud, which may lead to additional tax-related charges arising from broader financial investigations.

4. Global Trade and Commerce

A dedicated Trade Fraud Task Force will pursue schemes involving transshipment, country-of-origin fraud, customs undervaluation, sanctions evasion, and forced-labor supply chain issues. Importers and multinational supply chains are advised to conduct thorough audits of customs declarations and supplier due diligence processes.

5. Corporate Misconduct

The division reaffirms the DOJ's established 'carrot-and-stick' approach to corporate enforcement. It will continue to reward voluntary self-disclosure, cooperation, and robust remediation efforts from organizations. Conversely, companies that fail to comply with these expectations will face aggressive prosecution. This policy remains consistent with existing DOJ corporate enforcement guidelines but will now be applied by a significantly better-resourced team.

Implications for Healthcare Providers

The DOJ's creation of the National Fraud Enforcement Division and its explicit prioritization of healthcare fraud enforcement, particularly in areas like telemedicine and controlled substance diversion, signals a heightened risk environment for healthcare providers. While none of the identified priority areas represent entirely new regulatory frameworks, the increased allocation of resources means a greater likelihood of enforcement actions. Healthcare businesses, including those involved in telehealth, medspas, dental services, and chiropractic care, must strengthen their compliance programs, ensuring they are well-versed in billing regulations, anti-kickback statutes, and appropriate telemedicine practices. Proactive auditing and risk mitigation strategies are crucial in this evolving regulatory landscape.

Key Facts

| Detail | Value | |---|---| | Issuing Agency | Department of Justice (DOJ) | | Memo Date | August 13, 2026 | | Division Name | National Fraud Enforcement Division | | Projected Headcount (by Aug 24, 2026) | Roughly 500 attorneys and staff | | Key Healthcare Focus Areas | Telemedicine, Medicare and Medicaid billing, controlled substance diversion, home health and hospice arrangements |

Frequently Asked Questions

What is the new DOJ National Fraud Enforcement Division?

It is a new division created by the Department of Justice earlier this year, designed to significantly ramp up federal fraud enforcement with increased resources and specialized sections, including one for healthcare fraud.

When did the DOJ outline its new enforcement priorities?

Assistant Attorney General Colin M. McDonald issued a memo titled 'The Fraud Division’s Enforcement Priorities' on August 13, 2026, outlining these priorities to all personnel of the new division.

Which areas of healthcare are specifically prioritized for enforcement?

The memo specifically singles out telemedicine, Medicare and Medicaid billing, controlled substance diversion, and home health and hospice arrangements as key areas for enforcement scrutiny.

Does this mean new laws are being created?

No, the memo states that these priority areas do not break new ground or represent new frameworks, but rather highlight where companies should expect the most enforcement scrutiny due to increased resources and tools.

What should my practice do in response to these priorities?

Practices, including smaller ones, should revisit their billing compliance, assess their exposure to kickback statutes (like AKS and Stark), and review their telehealth arrangements, as more investigations are expected.

Source: natlawreview.com — Defendant Charged in Telemedicine and DME Fraud Scheme