In February, Vice President Vance and Dr. Mehmet Oz, administrator of the Center for Medicare and Medicaid Services (CMS,) discussed plans for a new assistant attorney general position to address fraud, waste, and abuse involving taxpayer-funded programs such as Medicare and Medicaid.
In April, the federal administration announced the creation of the National Fraud Enforcement Division (NFED), a unit intended to address and reduce fraud, waste, and abuse within taxpayer-funded programs. According to the White House, the division will “combat the rampant and pervasive problem of fraud in the United States," and enforce federal criminal and civil laws targeting fraud involving government programs, federally funded benefits, businesses, nonprofits and individuals nationwide.
What is the National Fraud Enforcement Division (NFED)?
The National Fraud Enforcement Division is a Department of Justice enforcement initiative created to coordinate investigations and prosecutions involving fraud against taxpayer-funded programs, including health care fraud, financial fraud, and certain tax-related offenses.
How is the NFED structured?
Under the direction of Assistant Attorney General Colin McDonald, the NFED consolidates oversight of several Criminal Division units, including coordination with the Government and Consumer Fraud Unit, the Health Care Fraud Unit, and the Tax Division, which handles prosecution of criminal tax matters, including tax fraud, tax evasion, and other financial crime matters.
McDonald has served multiple roles within the Department of Justice since 2014. McDonald noted, "Republicans and Democrats can and should agree: fighting fraud, particularly fraud on the American taxpayer, is important work, and that's true now more than ever."
NFED enforcement focus and what businesses need to know
The NFED has indicated it will pursue fraud involving taxpayer-funded programs at multiple levels, including health care fraud, financial crimes, and tax-related offenses. The division has emphasized the use of data-driven enforcement techniques, centralized reporting, and coordinated oversight to identify potential fraud concerns.
Health care companies participating in Medicare, Medicaid, or other federally funded programs should review their billing practices, tax reporting, internal controls, and compliance procedures. Enforcement activity is unlikely to be limited to large-scale fraud, and smaller reporting issues may also receive attention.
Businesses should remember that tax fraud and tax evasion are not limited to elaborate schemes. Inaccurate reporting, improper deductions, payroll tax issues, offshore tax account concerns, and intentional concealment of income can all attract scrutiny when federal investigators are focused on protecting taxpayer-funded programs.
In May, McDonald announced the formation of a “Strike Force” to identify and prosecute health care fraud on the West Coast, including a plan to add “at least 10 additional federal prosecutors to the region.” If you are not sure what constitutes tax fraud, tax evasion or another tax crime, review our resource, Understanding Tax Fraud.
What businesses should do now
Given the ramp-up of the NFED, businesses involved in government contracts, particularly those operating in the health care sector, should review their books and compliance procedures with an accountant or an experienced tax attorney.
While the long-term impact of the NFED remains to be seen, the message from federal enforcement agencies is clear: fraud involving taxpayer-funded programs remains a priority. Businesses that identify potential compliance concerns should address them promptly before they become the subject of regulatory scrutiny.
If you uncover potential tax compliance issues, consulting a tax attorney is an important step. If you have questions about tax fraud, tax evasion, or another tax crime, contact our legal group at 440-250-9709. With offices in Cleveland and Chicago, the firm serves clients throughout the U.S. and internationally.
