The Regulator

A Memphis gynecologist got 20 years in federal prison for reusing unsterilized biopsy devices on more than 15,000 patients and billing Medicare and Medicaid for it. Chief U.S. District Judge Sheryl Lipman sentenced Dr. Sanjeev Kumar, 45, on July 8, 2026, to 240 months in prison plus two years of supervised release, after a jury convicted him of 18 counts of adulterating medical devices, 16 counts of misbranding, and 6 counts of health care fraud. Between September 2019 and April 2024, Kumar performed more than 15,000 hysteroscopy-with-biopsy procedures, using reused single-use hysteroscopes and graspers without proper sterilization (some of the original graspers from 2019 were still in use in April 2024), and billed more than 41 million dollars for the procedures, netting over 4.8 million dollars from Medicare and Medicaid alone. Confidence: High. Source: Memphis Gynecologist Sentenced to 20 Years in Prison, U.S. Attorney’s Office, Western District of Tennessee.

The founder of a telehealth ADHD startup got six years in prison, and her clinical president two years, for a 90 million dollar scheme that shipped more than 37 million Adderall pills. Ruthia He, founder and former CEO of Done Global, was sentenced July 7, 2026 to 72 months in prison and a 1 million dollar fine; David Brody, the company’s former clinical president, was sentenced to 24 months. The court ordered roughly 29 million dollars forfeited from He and 4 million dollars from Brody, and combined with penalties on other co-conspirators, total financial recovery in the case exceeds 90 million dollars. Prosecutors said Done ran a subscription-for-prescription model that paid clinicians up to 60,000 dollars a month to authorize stimulant prescriptions, some signed in under 30 seconds, used an auto-refill feature with little follow-up, and spent more than 40 million dollars on social media ads, defrauding insurers of over 12 million dollars in the process. Confidence: High. Source: Founder/CEO and Clinical President of Digital Health Company Sentenced for $90 Million Scheme, HHS Office of Inspector General.

HHS’s Office of Inspector General cut off New York’s Medicaid Fraud Control Unit from 60 million dollars a year in federal funding, the highest-profile state fraud-unit decertification in recent memory. OIG formally denied recertification of the New York State Medicaid Fraud Control Unit and suspended its federal funding effective July 1, 2026, in a decision announced July 2. The unit receives about 60 million dollars annually and employs more than 270 staff, but OIG found it secured only 8 to 9 criminal indictments a year in fiscal 2023 and 2025, versus hundreds in similarly sized states, and just 4 convictions for patient abuse or neglect despite more than 2,000 such referrals a year; 34 percent of its open cases are more than three years old. New York must submit a corrective-action plan within 30 days and a progress report within 90 days, and OIG can lift the suspension if it finds sufficient remediation before September 30, 2026. The decertification lands seven weeks after the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee held a hearing examining Medicaid program integrity in New York and three other states. Confidence: High. Source: Statement on Federal Decertification of the New York Medicaid Fraud Control Unit, HHS Office of Inspector General.

CMS wants states to file their Medicaid managed-care payment plans before the money moves, not after, with comments due July 21. The Centers for Medicare and Medicaid Services proposed rule CMS-2449-P, published May 20, 2026, would implement Section 71116 of the 2025 Working Families Tax Cut law by requiring states to submit state-directed-payment “preprints” prospectively, before a rating period begins, starting with the first rating period on or after July 9, 2026, and would clarify that those payments must be based only on services actually furnished by the paid provider, closing a route states have used to route Medicaid dollars through intermediaries. Hospitals and health plans that rely on state-directed payments, a fast-growing share of Medicaid managed-care financing, would face a tighter filing calendar and new restrictions on who the money can reach. Confidence: Medium; this account draws on CMS’s fact sheet and regulatory-industry summaries of the rule rather than our own read of the full Federal Register text, which we could not retrieve this run. Source: Medicaid Program; Medicaid Managed Care State Directed Payments and Medicaid Fee-for-Service Targeted Medicaid Practitioner Payments, Federal Register.

Montana and Arkansas became the first states to start Medicaid work requirements on July 1, taking opposite approaches to a rule roughly 26 states are now suing over. Under the same 80-hour-a-month community-engagement rule that Arizona and two dozen other states sued to block (covered here July 8), Montana began enforcement July 1: non-exempt Medicaid Expansion members ages 19 to 64 must document 80 hours a month of work, school, or community engagement, with July through September as a hold-harmless period of informational notices and Department of Labor referrals rather than denials, before enforcement with real consequences starts in October. Arkansas launched a “soft” version the same day, running automated checks on whether beneficiaries are exempt, meeting, or not meeting the requirement and notifying them of their status, with no penalties or disenrollments until full implementation in 2027. All states must launch some version of the requirement by January 1, 2027. Confidence: High. Sources: Montana Medicaid Community Engagement Requirements Begin July 1, Montana Department of Public Health and Human Services, Welfare to Work Requirement Rollout Begins July 1, Office of Arkansas Governor Sarah Huckabee Sanders.