DOJ Launches Fraud Whistleblower Incentive Program Offering Rewards for Tips Leading to Criminal Charges

DOJ Launches Fraud Whistleblower Incentive Program Offering Rewards for Tips Leading to Criminal Charges

On October 20, the US Department of Justice (DOJ) and the National Fraud Enforcement Division announced the Fraud Whistleblower Incentive Program (WHIP). The DOJ describes the WHIP as the first whistleblower rewards program to pay rewards for tips as soon as they yield unsealed criminal charges, rather than after a case concludes. Formally titled the Criminal Tip Rewards Pilot Program, the WHIP has an initial three-year term and follows Directive 26-12, issued by Assistant Attorney General Colin M. McDonald on October 1. The Department of the Treasury is committing $25 million to implement the program.

The defining feature of the WHIP is timing. Under the program, whistleblowers may receive between $10,000 and $30,000 for information that leads to criminal charges. Most government programs, by contrast, pay only after a matter is fully resolved, including forfeiture and appeals. Because the award is not tied to government recovery, a tip about an unsuccessful fraud, or one involving little or no loss, can still qualify. Whistleblowers may receive one award for each distinct tip and remain eligible for larger awards under other programs, including the Criminal Division’s Corporate Whistleblower Awards Pilot Program.

The WHIP’s covered subject matter includes federal health care offenses and fraud on programs administered by the US Departments of Agriculture (USDA), Labor, Health and Human Services, Housing and Urban Development, Education, Veterans Affairs, Defense/War, and the Small Business Administration. According to the DOJ, the program will prioritize tips involving hospice, home health care, day care, and special services fraud, such as autism care. 

To qualify, an individual must “voluntarily provide original, specific, truthful, complete, and timely information.” The individual must also cooperate with the DOJ, including working proactively under law enforcement supervision if asked. Companies, individuals who meaningfully participated in the fraud, and executives who ignored red flags are ineligible to recover under the WHIP.

Information obtained through privileged communications, compliance or internal audit roles, or internal investigations generally does not qualify because it is not treated as the whistleblower’s own independent information. However, a compliance or audit employee may qualify if, for example, sufficient time has passed after they reported the issue internally and no action has been taken. 

For companies in health care and other government-funded sectors, the WHIP lowers the barrier for employees to go directly to criminal prosecutors. The DOJ will weigh retaliation, and any effort to stop employees from communicating with the DOJ (including enforcing confidentiality agreements), when it assesses a company’s cooperation credit, its compliance program, and possible obstruction charges. 

Read the DOJ’s press release here, the DOJ’s guidance here, and the DOJ’s FAQ here. For more information about Directive 26-12, read the Investigations Blog alert here.

HealthSplash Executive Sentenced to 18 Months After Cooperating in $450 Million DMERx Medicare Fraud Case

On October 16, Gregory Schreck, a former vice president of HealthSplash Inc., was sentenced to 18 months in prison for his role in a scheme to defraud Medicare through DMERx, a software platform that the government says generated fake prescriptions for orthotic braces. Schreck pleaded guilty in February 2025 to conspiracy to commit health care fraud; he admitted to conspiring with DMERx developer Gary Cox, HealthSplash CEO Brett Blackman, and others to operate HealthSplash and National Center for Pain LLC between 2017 and 2020. 

The government characterized HealthSplash as a centralized hub built to facilitate Medicare fraud. The DOJ described HealthSplash’s role in connecting foreign call centers with telemedicine doctors and durable medical equipment companies, enabling doctors who were not treating patients to be paid kickbacks in exchange for prescriptions for orthotic braces. In total, the scheme billed Medicare more than $1 billion, of which about $450 million was paid. The DOJ reports that orthotic braces were billed for more than 346,000 Medicare beneficiaries. 

The government asked for a 40% reduction from the 10-year statutory maximum, citing Schreck’s extensive cooperation. Judge David S. Leibowitz of the Southern District of Florida went lower still, reasoning that a more lenient sentence would send a clearer message to future defendants that cooperating early with prosecutors pays off. While the court acknowledged that Schreck played a pivotal role in enabling the fraud, it noted that Schreck’s trial testimony was crucial to convicting Blackman, who was convicted of conspiracy to commit health care fraud and wire fraud, conspiracy to pay and receive kickbacks, and conspiracy to defraud the United States for his role in the scheme. Blackman and Cox were sentenced to 19 years and 15 years in prison, respectively. 

For more information, read the Investigations Blog alert on Cox’s conviction here.

The case is United States v. Blackman et al., 1:23-cr-20271 (S.D. Fla.). 

Illinois Lab Executive Indicted in $66 Million COVID-19 Testing Fraud Scheme

On October 19, a federal grand jury in the Northern District of Illinois indicted Rajesh “Raj” Patel on five counts of wire fraud. Patel is the chief operating officer of an Illinois clinical laboratory, and the charges relate to the Health Resources and Services Administration’s (HRSA) COVID-19 Uninsured Program. During COVID, the HRSA Uninsured Program reimbursed providers for COVID-19 testing of uninsured individuals. Participating providers had to certify, among other things, that patients were uninsured, that tests were medically necessary, and that all claim information was true and accurate. 

According to the indictment, the laboratory paid Meridian Medical Staffing, Inc. at least $60.3 million to collect test specimens and supply patient information. Many of those purported patients either did not exist or never submitted specimens. From approximately May 2021 through April 2022, Patel allegedly created and released fabricated negative results in the laboratory’s information system for about 380,000 PCR tests that were never completed. The DOJ alleges that this caused about $66.2 million in fraudulent claims to be submitted to HRSA, resulting in about $44.1 million in payments. According to the indictment, Patel then transferred about $28 million of the proceeds into his personal accounts and told others to exclude the Meridian tests from results the laboratory was required to report to the Illinois Department of Public Health in order to conceal the scheme. 

The indictment also seeks forfeiture of proceeds traceable to the offense, including substitute property. 

Read the DOJ’s press release here.

Fraud Division and USDA Announce First Nationwide SNAP Fraud Enforcement Surge, Targeting Nearly $42 Million in Losses

On October 21, the Fraud Division, the USDA, and the USDA Office of Inspector General (OIG) announced the results of the DOJ’s first National USDA Benefits and Program Fraud Enforcement Surge. These efforts focused on identifying fraud relating to the Supplemental Nutrition Assistance Program (SNAP), as well as other USDA programs.

Since September 1, the Fraud Division — in coordination with 13 US Attorneys’ Offices and the Utah Attorney General’s Office — has brought actions against more than 40 defendants. The government alleges that, in total, the schemes caused nearly $45 million in losses, with nearly $42 million from SNAP benefits fraud alone. This announcement comes one day after the DOJ launched the WHIP, which expressly covers fraud on USDA-administered programs such as SNAP. 

An indictment, complaint, or information is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law. 

Read the DOJ’s press release here.