The U.S. Department of Justice (DOJ) and U.S. Department of Health and Human Services Office of Inspector General (HHS OIG) are targeting healthcare professionals and others suspected of improperly billing federal healthcare programs (i.e., Medicare and Medicaid) for wound care services. These investigations pose substantial risks, and federal investigators are looking for evidence of all forms of potential fraud.

Wound care fraud is currently among the federal government’s top healthcare fraud enforcement priorities. The U.S. Department of Justice (DOJ), U.S. Department of Health and Human Services Office of Inspector General (HHS OIG), and Centers for Medicare and Medicaid Services (CMS) are targeting wound care clinics, durable medical equipment (DME) companies, physicians, nurse practitioners, and other medical professionals and healthcare providers suspected of improperly billing under Medicare, Medicaid, and other federal government programs.

Along with the submission of fraudulent claims, federal authorities are targeting providers and other entities and individuals suspected of paying illegal kickbacks and entering into other improper financial relationships as well. The DOJ, HHS OIG, and CMS are targeting all forms of suspected fraud, and they are pursuing both civil enforcement and criminal prosecution as warranted.

“It is critical for healthcare providers and other entities that bill for wound care services and supplies to ensure compliance when billing Medicare and Medicaid. Federal authorities are prioritizing wound care fraud cases across the healthcare industry, including cases involving billings for unnecessary skin substitutes, unnecessary durable medical equipment (DME), and other services and items that lack medical justification.” – Lynette S. Byrd, Managing Partner at Oberheiden P.C.

Even if a provider or business does not intend to defraud Medicare or Medicaid, improperly billing for wound care services or equipment can still lead to serious allegations. While federal authorities generally need evidence of intent to pursue criminal charges, inadvertently failing to maintain full statutory and regulatory compliance can lead to recoupments, suspension or exclusion, and other penalties.

Federal Authorities Are Targeting Wound Care Providers for All Forms of Alleged Healthcare Fraud

Federal authorities (and Medicare contractors) are targeting wound care providers and other entities and individuals suspected of all forms of alleged healthcare fraud. While authorities are targeting individuals suspected of perpetrating criminal wound care schemes, they are also targeting legitimate providers (and others) in cases involving allegations such as:

Fraudulent Billing Practices Under the False Claims Act

Fraudulent billing practices are among the most common allegations in federal health care fraud cases involving wound care. The False Claims Act (FCA) prohibits the submission of “false and fraudulent claims” under Medicare, Medicaid, and other federal programs. Some of the most common allegations in FCA cases include:

• Lack of Medical Necessity – Providing and billing for wound care services (including skin grafts and skin graft substitutes), skin substitute products, and other medical supplies that are medically unnecessary.
• Improperly Billing for Patient Care – Upcoding, unbundling, double-billing, and other improper billing practices under government programs.
• Other Forms of Billing Fraud – Misrepresenting wound measurements, misrepresenting compliance with treatment plans, falsifying patients’ clinical records, billing extensively for minor wounds, and other forms of health care billing fraud.

Along with the persistent audit risk that healthcare providers face when billing Medicare and Medicaid, providers also face the risk of being targeted in a criminal health care fraud investigation. Federal authorities are currently targeting providers across the healthcare system that submit reimbursement requests related to wound care.

Improper Financial Incentives Under the Anti-Kickback Statute and Stark Law

Along with improper skin substitute billing and other forms of billing fraud, federal authorities are also targeting entities and individuals suspected of offering and accepting improper financial incentives under the Anti-Kickback Statute and Stark Law. These laws prohibit the use of Medicare and Medicaid-reimbursed funds to compensate for referrals, and they apply to all types of business relationships, from vendor contracts to agreements between related entities.

Failure to Maintain an Effective Billing Compliance Program

To manage wound care compliance effectively, healthcare providers need robust compliance programs that are custom-tailored to their specific needs. Custom-tailoring is essential, as wound care clinics, hospital outpatient departments, physician practices, and other providers’ compliance needs can vary significantly.

Maintaining thorough documentation of providers’ compliance efforts is critical as well, and regular internal audits of high-risk billing codes are essential for both documenting compliance and avoiding significant compliance failures. If a provider is not prepared to affirmatively demonstrate compliance with respect to billing for skin substitute grafts, advanced wound care products, or other wound care products or services, this lack of proper documentation alone can expose the provider to liability.

Federal Authorities Are Also Targeting Other Entities and Individuals Suspected of Improperly Billing Federal Programs

Along with targeting healthcare providers, the DOJ, HHS OIG, and CMS audit contractors are also targeting other entities and individuals suspected of Medicare and Medicaid billing fraud. Fraudulent Medicare spending alone costs the federal government tens of billions of dollars annually (and Medicare spending on skin substitutes rose approximately 640%—from $400 million to close to $10 billion—from 2023 to 2025); and, while this involves fraudulent claims submitted by healthcare providers, it also involves fraudulent claims submitted by durable medical equipment (DME) companies and other businesses.

Defending Against a Federal Investigation Involving Alleged Fraud Related to Wound Care

For all targeted entities and individuals, defending against a federal investigation involving alleged fraud related to wound care requires an informed, proactive, and strategic approach. Engaging an experienced law firm is the first step in the process. Targeted entities and individuals need a team of attorneys who have an in-depth understanding of the complex billing and coding rules that apply in these cases, and who have first-hand experience assisting clients with responding to both Medicare audits and record requests from federal law enforcement authorities.

Critical steps when facing a federal wound care fraud investigation include:

• Determining the Focus and Scope of the Investigation – Executing an effective defense requires a clear understanding of the focus and scope of the government’s investigation. This requires strategic intervention in the investigation and effective communication with the federal agents and prosecutors involved.
• Conducting a Wound Care Billing Compliance Assessment – Executing an effective defense also requires a clear understanding of the practice’s or business’s risk exposure. Upon learning of an investigation, targeted entities should work with their legal counsel to quickly conduct a privileged internal audit.
• Proactively Addressing Any Compliance Issues – If a practice’s or business’s compliance assessment reveals any billing violations, these should be addressed promptly (but carefully). Any ongoing compliance issues should be remedied promptly as well.
• Engaging Effectively with the Investigating Authority(ies) – Beyond determining the focus and scope of the investigation, engaging effectively with federal agents and prosecutors throughout the investigative process is critical for facilitating a favorable resolution. While a cooperative approach is often warranted, targeted entities and individuals must be careful to avoid being too cooperative and sharing information that they could (and should) have protected.
• Targeting a Resolution that Avoids Formal Charges – Entities and individuals that are at risk of facing prosecution should target a specific desired resolution that avoids formal charges. Resolving a wound care fraud case at the investigative stage avoids both unnecessary costs and unnecessary uncertainty.

These are just examples. Defending against a federal wound care fraud investigation is a complex and high-risk process that requires a custom-tailored approach. Since these investigations can progress quickly, it is imperative to engage legal counsel as early in the process as possible.

Defending Against Wound Care Fraud Allegations in Federal Court

When investigations lead to federal litigation, engaging experienced legal counsel is critical in this scenario as well. Not only is the federal government prioritizing wound care fraud enforcement, but whistleblowers also have significant financial incentives to pursue wound care fraud cases under the False Claims Act.

The FCA’s qui tam provisions allow whistleblowers to sue on behalf of taxpayers; and, in qui tam lawsuits filed under the false claims act, whistleblowers can receive between up to 30% of the government’s recovered funds. More than 1,200 FCA cases were filed by whistleblowers in 2025, and we are seeing a high volume of these cases in 2026 as well.

While many wound care fraud cases are civil in nature, we are increasingly seeing cases in which the DOJ is pursuing criminal charges against both entities and individuals. Criminal cases begin with a federal grand jury indictment. When facing an indictment, it is imperative to do everything possible to prevent formal charges from being filed. Preventing an indictment can help facilitate an efficient and favorable resolution. Conversely, once the DOJ secures an indictment, this can provide federal prosecutors with significant leverage in any settlement or plea deal negotiations.

With that said, targeted entities and individuals can (and do) avoid liability after the federal grand jury stage. While there are no guarantees, there are various potential options for both securing a pre-trial dismissal and securing a favorable outcome at trial. Once again, experienced legal representation is essential; and, here too, engaging experienced legal counsel promptly can help maximize targeted entities’ and individuals’ chances of avoiding unnecessary consequences.