Medicaid Fraud Control Units: The 2025 Annual Report
Medicaid Fraud Control Units (“MFCUs”) are specialized state law enforcement agencies charged with investigating and prosecuting health care providers who defraud the Medicaid program, as well as protecting patients from abuse and neglect. The U.S. Department of Health and Human Services Office of Inspector General (“HHS-OIG”) is the designated federal agency responsible for overseeing the MCFUs. Though many MFCUs technically report to the Office of the Attorney General in their state, their activities tend to be in close coordination with, and directed by, the federal authorities since they typically fund approximately 70% of an MFCU’s annual budget. In March 2026, HHS-OIG released its Medicaid Fraud Control Unit Annual Report for fiscal year 2025.
MFCUs recovered nearly $2 billion during 2025, generating a return of $4.64 for every $1 spent. Total convictions rose to 1,185, including 856 fraud convictions and 329 patient abuse or neglect convictions. Criminal recoveries reached $1.3 billion—the highest amount in the past 10 years. A sizable portion of that figure, roughly $650 million, was attributed to a single case investigated by the Virginia MFCU, which involved a global management consulting firm that provided advice to an opioid manufacturer regarding the sales and marketing of an extended-release opioid drug. According to the Department of Justice, the case marked the first time a management consulting firm was held criminally responsible for advice resulting in the commission of a crime by a client.
On the civil side, the number of civil settlements and judgments increased 37%, from 493 in 2024 to 674 in 2025. Total civil recoveries likewise saw a substantial jump, rising from $407 million in 2024 to $706 million in 2025. Pharmaceutical manufacturers accounted for the largest number of civil settlements and judgments, while hospitals accounted for the largest total dollar amount of civil recoveries. In a notable civil case, the Indiana MFCU investigated a whistleblower action alleging that a hospital health network paid physicians to refer patients to the network’s own facilities, resulting in a $135 million settlement.
The 2025 Medicaid Fraud Control Unit Annual Report sends a clear signal that MFCU enforcement is intensifying. Record-level criminal recoveries and the increase in civil settlements point to an enforcement environment in which providers face heightened scrutiny. In 2025 alone, 900 individuals or entities were excluded from federal health care programs as a result of MFCU convictions, representing 32% of all HHS-OIG exclusions.
