The Department of Justice ramped up efforts over the past five years to combat Affordable Care Act fraud, particularly schemes in which insurance brokers enroll ineligible people into marketplace plans and cause illegal insurance claims to the government. A recent $161 million case highlights the increased scrutiny on insurance brokers.
This article by TELG principal Janel Quinn and TELG associate Keri Teal was published by The Employment Law Group, P.C. on August 29, 2025.
By Janel Quinn and Keri Teal
Insurance brokers are under a magnifying glass as the Department of Justice (DOJ) ramps up efforts to sniff out fraudulent Affordable Care Act applications and related illegal insurance claims. A recent $161 million ACA fraud case revealed that brokers can potentially be charged for violations of multiple laws.
The DOJ has intensified its focus on ACA-related fraud over the past five years, often including schemes where insurance brokers register ineligible individuals for ACA marketplace plans. Some brokers receive illegal bribes to enroll more people, causing the government to receive fraudulent claims for healthcare.
What is ACA Broker Fraud?
ACA marketplace plans are meant to provide health insurance at reduced or no cost for individuals who meet specific eligibility criteria. The federal government offers subsidies to these enrollees that can go toward paying the insurance premium.
However, some brokers have exploited the system by ignoring the criteria and enrolling people who:
A 2015 case involved a broker who enrolled hundreds of people in a homeless shelter, using dubious income estimates. In other cases people weren’t even aware they had been enrolled until they received a letter from the IRS. These enrollments, based on false and inaccurate information, result in unlawful subsidy payments from the government that wouldn’t have been issued had their ineligibility been known.
The misconduct goes beyond fraudulent applications. The DOJ uncovered arrangements where insurance companies or third-party marketing firms pay brokers bribes in exchange for steering individuals toward certain plans. These payments — known as “kickbacks” — might be disguised as marketing fees or bonuses, but they regardless violate the Anti-Kickback Statute (AKS) and can lead to violations of the False Claims Act (FCA).
What is the FCA, and Why Does it Apply Here?
The FCA imposes liability on anyone who knowingly submits, or causes the submission of, false or fraudulent claims to the government. Enrolling ineligible individuals with falsified or misleading information is an example of this. A person who is ineligible for ACA coverage cannot legally submit a claim for subsidy to the Centers for Medicare & Medicaid Services.
Even if a person is qualified for coverage, their claims may still be illegal because of a broker or insurer’s misconduct. If the broker or insurer involved in a person’s ACA enrollment is engaged in kickback arrangements, every claim tied to those bribes may be considered “tainted.” Courts[1] have held that violations of the AKS render all connected claims submitted “in violation of law,” and thus actionable under the FCA.
Why Should This Matter to You?
Improper subsidy payments divert taxpayer dollars from those who genuinely qualify for ACA coverage. They also distort insurance markets by inflating plan enrollment numbers, potentially raising costs for everyone under the same plan, and misallocating federal funds.
More recently, investigators have paid closer attention to insurance brokers, particularly those involved in questionable enrollment practices. While brokers may not submit claims themselves, courts have held that those who cause false claims to be submitted — by enrolling ineligible individuals, for example — can still be held liable under the FCA.
A Real-World Example: DOJ’s $161 Million ACA Fraud Case
In February of 2025 the DOJ announced charges against the president of an insurance brokerage firm and the CEO of a marketing company. The defendants allegedly submitted fraudulent ACA applications on behalf of individuals who did not meet the minimum income threshold for subsidies. Specifically, the defendants targeted vulnerable people experiencing homelessness, unemployment, and mental health or substance use disorders.
According to the indictment, the defendants also paid kickbacks to induce enrollments into specific ACA plans, while receiving undisclosed compensation from insurers in return. This combination of false applications and illegal inducements created a pipeline of tainted subsidy claims.
The DOJ estimated that the scheme cost the federal government at least $161,900,000 in improperly obtained subsidies, making it one of the more consequential ACA enrollment fraud cases charged to date.
ACA fraud is not just a compliance concern — it’s a False Claims Act risk. Brokers and insurers should carefully review their internal controls, especially those tied to eligibility screening, enrollment practices, and compensation arrangements.
If you discover that your employer is engaging in a similar scheme, or have a problem at work more generally, call The Employment Law Group.
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[1] U.S. ex rel. Hueseman v. Prof. Compounding Centers of Am., Inc., 664 F. Supp. 3d 722, 732–33 (W.D. Tex. 2023).
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Janel Quinn is a principal of The Employment Law Group, P.C.; Keri Teal is an associate at the firm.
