A major enforcement action by the U.S. Department of Justice (DOJ) has uncovered a large-scale fraud scheme involving Affordable Care Act (ACA) health insurance enrollments. A national insurance brokerage network and its former subsidiary have agreed to pay more than $160 million to resolve criminal and civil allegations tied to the case.
The case involves AP of South Florida, LLC (APSF), a Florida-based insurance brokerage company. APSF has agreed to plead guilty for its role in a scheme that fraudulently enrolled thousands of individuals into ACA health insurance plans.
Federal authorities stated that APSF, through senior executives and employees, submitted false insurance applications to obtain government subsidies. The ACA program provides financial assistance through Advanced Premium Tax Credits, which are meant to help eligible individuals afford health insurance.
Investigators found that the subsidy system was misused, leading to approximately $141.5 million in improper federal payments.
Multiple federal agencies took part in the investigation, including the Federal Bureau of Investigation (FBI) led by Director Kash Patel, the Department of Health and Human Services Office of Inspector General (HHS-OIG) led by Inspector General T. March Bell, and IRS Criminal Investigation (IRS-CI) led by Chief Guy Ficco. These agencies worked together to trace financial activity and identify how the fraud scheme operated.
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Fraud Scheme Involved False Income Reports, Medicaid Manipulation and Incentives
According to Assistant Attorney General A. Tysen Duva, the scheme used aggressive tactics to target vulnerable individuals, including people experiencing homelessness, unemployment, and substance abuse or mental health challenges.
Street marketers working for the insurance brokerage network approached individuals in places such as shelters, bus stops, and treatment centers. They allegedly offered cash or gift cards in exchange for personal information or enrollment participation.
Insurance applications were then submitted with false or altered details. A key method involved inflating income levels so individuals appeared eligible for ACA subsidies when they were not.
The scheme also manipulated Medicaid processes. Employees allegedly submitted false Medicaid applications to generate denial letters. These letters were then used to qualify individuals for special ACA enrollment periods outside normal timelines.
Investigators also found attempts to bypass verification systems used by the Centers for Medicare & Medicaid Services (CMS), including false responses during income checks.
The brokerage earned commissions and bonuses for each enrollment, increasing profits with every subsidized plan signed up through the scheme.
The conduct reportedly involved multiple employees and senior executives and continued even after changes in ownership. Internal oversight failures allowed the activity to continue for an extended period.
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APSF Guilty Plea and $160M+ Settlement Includes AssuredPartners Civil Resolution
The criminal case includes one count of major fraud against the United States. APSF has agreed to plead guilty and pay $27.6 million in restitution.
In a separate civil case, former parent company AssuredPartners, Inc. agreed to pay $135 million under the False Claims Act to resolve allegations of submitting or causing false claims for federal healthcare subsidies. The company itself was not criminally charged.
Together, the total financial resolution exceeds $160 million.
The case also involved former APSF president Cory Lloyd, who was previously convicted and sentenced to 20 years in prison for his role in the scheme. Court evidence showed that warnings were received about vulnerable individuals being improperly enrolled, but the conduct continued.
Some consumers reportedly lost access to Medicaid or other assistance programs after being moved into ACA plans they did not qualify for, leading to higher medical costs and disrupted treatment access.
The civil case originated from a whistleblower lawsuit under the False Claims Act. The whistleblower will receive approximately $24.3 million as part of the recovery.
Federal coordination included the DOJ Civil Division, DOJ Criminal Division, HHS-OIG, and IRS Criminal Investigation, which worked together to investigate and resolve the healthcare fraud case.