$1.3 Billion Medicare Fraud Allegations: DOJ Says Patients' Forms Listed Doctors They Had Never Seen and Equipment They Never Got

The US Department of Justice says some Medicare patients received Explanation of Benefits notices listing doctors they had never seen and medical equipment they say they never received, as part of what prosecutors describe as a $1.3 billion (about £962 million) fraud scheme.

The department detailed those allegations on 4 September 2026 when announcing a Massachusetts indictment charging Erekle Gugava with conspiracy to commit money laundering linked to claims submitted to Medicare and other insurers.

The DOJ described the notices when announcing a Massachusetts indictment charging Gugava with conspiracy to commit money laundering in connection with an alleged healthcare fraud scheme involving at least $1.3 billion (about £962 million) in claims submitted to Medicare and other insurers.

Patients Report Suspected Medicare Fraud

The department said the claims relied partly on stolen identities belonging to people in Massachusetts, elsewhere in New England and across the United States. Their Explanation of Benefits notices described equipment as having been prescribed and delivered, according to the charging documents cited by prosecutors.

The notices also named doctors whom recipients said they had never visited and listed ND Medical Solutions LLC (ND Medical), a company they did not recognise. The release describes many people reporting concerns, but provides no total for those whose identities were allegedly used.

A federal grand jury returned the indictment on 3 September. Gugava, a 33-year-old Georgian national, is charged with one count of money laundering conspiracy.

Prosecutors allege that he helped move proceeds from the scheme through bank accounts in the United States and overseas.

He is presumed innocent unless and until proved guilty beyond a reasonable doubt.

According to the Justice Department, Gugava purportedly owned ND Medical between February and July 2025. Charging documents identify ND Medical as a durable medical equipment company.

Prosecutors say it submitted at least $1.3 billion (about £962 million) in fraudulent claims during that period. The total covered Medicare, private insurers providing Medicare supplemental policies, private employer-sponsored plans and other insurers.

Those insurers paid the company approximately $6.5 million (about £4.8 million), the department said.

The larger figure represents claims submitted, rather than money received. The release does not break down the claims or payments by insurer, so it does not establish how much of either total is related specifically to Medicare.

Following Alleged Medicare Fraud Proceeds

Prosecutors allege that Gugava opened several accounts in ND Medical's name and was their sole signatory. He deposited cheques from Medicare supplemental insurers and other health insurers, according to the department.

The funds were ultimately transferred to overseas accounts for the benefit of a transnational criminal organisation based in Russia and elsewhere, prosecutors say.

Investigators allege the payments initially appeared legitimate because they came from Medicare and established private insurers. That origin, the department said, made the proceeds particularly susceptible to laundering.

Assistant Attorney General Colin M. McDonald, of the National Fraud Enforcement Division, said Gugava allegedly moved stolen proceeds through domestic and international financial channels. 'This indictment reflects our resolve to hold all participants in fraud networks accountable for their conduct.'

McDonald also said pursuing people who launder and transmit fraud proceeds was essential to protecting taxpayer resources.

The Justice Department links the organisation to Operation Gold Rush and what it describes as the largest healthcare fraud case it has prosecuted. That description concerns the wider case associated with the organisation.

The FBI, the Department of Health and Human Services' inspector general, postal investigators, tax investigators, Homeland Security Investigations and the Department of Labor's Employee Benefits Security Administration are investigating.

Federal fraud prosecutors and the Massachusetts US attorney's office are handling the prosecution. Gugava faces a maximum of 20 years in prison if convicted. The 4 September DOJ releases did not list a court date or identify defence counsel.