Healthcare Fraud Allegations in New York: $120 Million Scheme

Allegations of Healthcare Fraud in New York

Authorities in New York have charged two Queens residents with organizing an alleged healthcare fraud scheme totaling $120 million over a decade. This announcement, made by the U.S. Department of Justice, highlights the seriousness of the charges and the impact on federal healthcare programs. The allegations revolve around AI-driven prior authorization delays and regulatory compliance requirements aimed at deterring such fraudulent activities.

Details of the Alleged Scheme

Inwoo Kim and Daniel Lee from Flushing stand accused of conspiring to commit healthcare fraud, according to a federal complaint unsealed in Brooklyn. Kim allegedly operated a pharmacy and two social adult daycare centers, while Lee worked as a program director at one of these facilities. The scheme involved offering illegal incentives to Medicaid and Medicare recipients, including cash payments and supermarket gift certificates, which breaches fundamental regulatory compliance requirements.

Prosecutors assert that Kim and Lee submitted false claims for services that exceeded the capacity of their facilities or were medically unnecessary. These AI-driven prior authorization delays and false claims resulted in Medicare and Medicaid disbursing $120 million, highlighting the extent of the alleged fraud and its impact on payer and provider systems.

Law Enforcement Actions

In response to these serious allegations, law enforcement executed several search warrants and seized multiple bank accounts. Kim and Lee now face conspiracy charges to commit healthcare fraud, with potential sentences of up to 10 years. This interstate collaboration included the U.S. Department of Health and Human Services Office of Inspector General, the FBI, IRS Criminal Investigation, and the New York State Office of the Medicaid Inspector General, emphasizing the regulatory and risk management efforts involved.

Federal Commitment to Combating Fraud

Federal officials reaffirm their commitment to protecting government healthcare programs from abuses of federal resources. Assistant Attorney General A Tysen Duva and U.S. Attorney Joseph Nocella Jr have highlighted the significant impact of fraudulent activities on both federal health care programs and private insurers in the carrier industry. Trial Attorney Patrick J. Campbell of the DOJ's Fraud Section is prosecuting the case.

Broader Efforts Against Healthcare Fraud

This case underscores the DOJ's broader initiative under the Health Care Fraud Strike Force Program. Since 2007, this program has charged over 6,200 defendants responsible for fraudulent billing, impacting payer systems and resulting in more than $45 billion in fraudulent charges to federal healthcare programs and private insurers. It emphasizes the risks and the necessity of advanced underwriting and claims systems to mitigate such occurrences. Kim and Lee, like all defendants in criminal complaints, are presumed innocent until proven otherwise in court.

Reference: Information is based on a press release from the Department of Justice published on February 9, 2026. Further details can be accessed from the original source: justice.gov.