Centers for Medicare & Medicaid Services Administrator Dr. Mehmet Oz is pointing to a multimillion-dollar Medicaid fraud case in Brooklyn as an example of the challenge federal officials say they face in preventing fraudulent or improper healthcare payments.
The case involved Zakia Khan, a 55-year-old Brooklyn business owner who operated Happy Family Social Adult Day Care Center and Family Social Adult Day Care Center. Federal prosecutors said Khan participated in a scheme involving kickbacks and bribes to Medicaid recipients, allowing her businesses to submit claims for services that were not actually provided as represented to Medicaid.
According to the Justice Department, Khan’s adult daycare businesses fraudulently billed Medicaid approximately $64 million between 2017 and 2024, with Medicaid paying roughly $56 million of those claims. Prosecutors said Khan and her co-conspirators used multiple businesses to launder proceeds and produce cash used to pay marketers and Medicaid recipients. Undercover recordings included footage of Khan paying illegal kickbacks.
Khan pleaded guilty in August 2025 to conspiracy to commit healthcare fraud and conspiracy to defraud the United States and pay healthcare kickbacks. A federal judge sentenced her in September 2026 to 76 months in prison. She was also ordered to pay more than $56 million in restitution and forfeit approximately $5 million in fraud proceeds, including real estate, cash and gold jewelry.
Oz has used cases involving fraudulent billing to argue for stronger safeguards across Medicare and Medicaid. CMS says its Medicare program-integrity efforts generated $41.9 billion in savings during fiscal year 2025, a 59 percent increase from $26.3 billion the previous year. The agency reported a return of $22.30 for every dollar devoted to those integrity efforts.
The administration has simultaneously focused on Affordable Care Act marketplace enrollment. CMS has said that unauthorized enrollments, questionable income information and other eligibility problems have resulted in improper federal subsidy payments.
Florida has received particular attention. In its 2025 marketplace rulemaking, CMS said 2.7 million Floridians had reported household income between 100 and 150 percent of the federal poverty level when selecting plans during the 2024 enrollment period, while Census estimates suggested about 1.5 million Florida residents actually fell within that income band. CMS said the discrepancy suggested that more than one million Florida enrollments might have been improper.
Nationwide, CMS reported in January 2026 that it had ended premium subsidies or coverage for nearly 1.5 million people found either to be ineligible for financial assistance or to have been enrolled without authorization through the federal marketplace platform. The agency has implemented stronger income verification and other enrollment controls in response.
The figures require some distinction between proven criminal fraud and improper enrollment. A criminal case such as Khan’s involves charges, evidence, a guilty plea and sentencing. Marketplace discrepancies or improper payments can arise for several reasons and do not automatically establish criminal activity by individual consumers.
Still, the Brooklyn prosecution offers a concrete example of the financial stakes. Tens of millions of Medicaid dollars were paid on false claims, according to prosecutors, while federal healthcare programs collectively manage enormous amounts of taxpayer money.
For Oz and CMS, the policy challenge is finding fraudulent and improper claims before federal dollars are paid, while maintaining access to healthcare programs for legitimately eligible Americans.
Leave a Comment