Auditor identifies Montana health care fraud scheme targeting Native Americans

The scheme illustrates how gaps in federal health insurance oversight create opportunities for predatory actors to target vulnerable populations, and it has prompted warnings to insurance commissioners nationwide.

Montana State Auditor James Brown announced Tuesday that his office identified a health care fraud scheme targeting Native Americans on state reservations. At least 80 Native Americans were victimized in the scam, which exploited systemic gaps in federal health insurance enrollment and billing procedures. Brown’s office said it clawed back more than $23.3 million from fraudulent insurance claims and identified 207 potentially fraudulent enrollments representing an estimated $54.7 million in unjustified billing.

How the scheme worked

Fraudsters visited Montana’s Native American reservations and pressured people—particularly those appearing unhoused—to sign up for Affordable Care Act insurance plans, according to Brown’s office. They promised free treatment at high-end rehabilitation facilities, often in California, and provided transportation.

People affected by the scam reported feeling immense pressure, almost amounting to coercion, to comply, Brown’s staff said.

Once victims arrived at the facilities, fraudsters reported their conditions as requiring emergency treatment. This was significant: under federal law, insurance companies cannot deny coverage for emergency services. Fraudsters then billed insurance companies for treatments that did not occur, were not needed, or were performed at greatly inflated prices.

In one instance, fraudsters billed more than $900,000 for treatment for one person, Brown’s office said.

Systemic vulnerabilities that enabled the scheme

Brown’s office identified three major gaps in federal health insurance rules that the fraudsters exploited.

First, while most Americans must enroll in Affordable Care Act plans during a specific annual period, members of federally recognized tribes can sign up anytime. This gave fraudsters an extended window to approach and coerce Native Americans into enrollment.

Second, Montana has three ACA insurance providers, and one of them—PacificSource—covers out-of-state treatment. This allowed fraudsters operating in other states to bill Montana insurers for fictitious care administered elsewhere.

Third, significant gaps exist in eligibility verification for federal insurance subsidies. A recent Government Accountability Office report found that the federal Marketplace “approved coverage for nearly all of GAO’s fictitious applicants,” according to Brown’s office, indicating systematic failures in verification procedures.

Scale of the fraud

Brown’s office identified at least 80 Native Americans who were victimized in the scheme. Federal authorities approved the rescission of 80 fraudulent insurance sign-ups, allowing the auditor’s office to recover more than $23.3 million.

However, the total scope appears larger. Brown’s office identified 207 enrollments suspected of fraud, which could represent $54.7 million in unjustified insurance claims.

Precedent and warning

The current scheme echoes a 2023 Medicaid fraud targeting Indigenous peoples in Arizona. In that scheme, treatment centers billed Arizona’s health program for services that were never provided, exploiting a loophole that allowed individuals to operate as treatment facilities. Hundreds of people were criminally charged in connection with that fraud.

Brown is now warning insurance commissioners nationwide, particularly those in states with large Indigenous populations, to watch for similar schemes. His office has been in contact with the FBI and U.S. Attorney’s Office, since the fraud occurred on tribal land, placing it under federal prosecution authority.

Future implications

The fraud scheme could significantly change how insurance coverage is structured going forward. Brown noted in a statement that when fraudsters “bill $10,000 a day in fake enrollments, premiums rise, provider networks shrink, and families pay more for worse care.”

Some insurance companies may respond by limiting coverage for out-of-state services, potentially affecting legitimate patients seeking treatment outside Montana.