Montana State Auditor James Brown Saves Montana Insurance Company and Their Customers $23.3 Million by Exposing Fraud Scheme Which Victimized Tribal Communities

Montana State Auditor and Commissioner of Insurance James Brown announced that in the last year he secured more than $23.3 million in health care cost savings by identifying and then clawing back fraudulently-incurred treatment claims victimizing Montana health care insurers, their customers, and some of the most vulnerable members of Montana’s tribal communities.  Under the Affordable Care Act (ACA), Native Americans may enroll in a marketplace health plan at any time. The scheme involved targeting at-risk Native Americans, enrolling them in an ACA plan, transporting them across state lines, and then billing for rehab treatments that did not take place, were unnecessary, or performed at greatly inflated prices. 

The Commissioner said,

I am pleased to report my office’s comprehensive and decisive efforts in 2025 to investigate fraudulent health care claims and enrollments combined with our close cooperation with leading Montana health insurers, tribal communities, and federal health insurance and law enforcement partners saved the Montana health insurance system and Montana policy holders more than $23.3 million dollars in unsupported claims.  Our office is continuing to pursue additional investigations which are likely to result in millions more in savings for Montana insurers and their customers, and to stop the victimization of our tribal communities through these types of health care fraud schemes.  
 

Commissioner Brown’s investigative team examined 207 suspected fraudulent insurance enrollments tied to non-resident actors and some California-based treatment facilities, representing as much as $54.7 million in unjustified claims. To date, of the 207 suspected fraudulent enrollments, the US Department of Health and Human Services (HHS) Centers for Medicare and Medicaid Services (CMS) has approved the recission of 80 of those policies, with dozens more under review. 

“I am proud of the hard work of my staff which partnered with the Trump Administration to root out this fraudulent scheme in our state and expose it to the light of day,” said Commissioner Brown.

Our office focused on stopping the scheme before it could further drive up premiums for Montanans and reduce access to care for Montana individuals and families. The most reprehensible aspect of this scheme is how the people who were allegedly provided ‘care’ were vulnerable populations that were, in some cases, exploited, coerced, moved across state lines, and not even so much as given a way to get back home to Montana.
 
“This scheme wasn’t a mistake. It wasn’t compassion.” Commissioner Brown said.

This was a coordinated operation to bilk a leading Montana health insurance provider for millions of dollars. The perpetrators of this fraud lied, falsified records, and exploited some of the most vulnerable people in our state, while they tried to stick Montana’s health insurers and our state’s health insurance system with the bill. That ends now.
 
The State Auditor’s Office assisted PacificSource, a not-for-profit health insurance provider, and one of Montana’s three providers of health insurance plans under the Affordable Care Act. PacificSource identified more than 200 health insurance policies against which tens of millions of dollars in potentially fraudulent claims had been filed.

Commissioner Brown said,

PacificSource did the right thing by coming to our office quickly to disclose this serious problem and work with us to protect an important player in our state’s health insurance system. That helped us put an end to this fraud scheme which preyed on innocent and vulnerable people in our state.

 
For its part, PacificSource spokesperson Erik Wood said,

“We’re grateful to Commissioner Brown and his team for their partnership and support. Their involvement has been instrumental in helping stop suspected fraudulent activity in the individual marketplace. As a nonprofit health plan, PacificSource exists to keep health care accessible and affordable for our members, and preventing fraud is an important part of that work. We appreciate the state’s commitment to protecting Montanans and the integrity of our health insurance system.”

     
 
Fraud Is a Hidden Tax on Working Families

Brown emphasized that healthcare fraud is not victimless and that it directly raises costs for law-abiding Montanans.

Every fraudulent claim is a hidden tax on honest families,” Brown said. “When scammers bill $10,000 a day in fake enrollments, premiums rise, provider networks shrink, and families pay more for worse care. Fighting fraud is how we protect affordability.
 
Aggressive Enforcement, Real Consequences

The CSI investigation found:

-Unlicensed and out-of-state actors manipulating federal healthcare enrollment systems
-False residency claims, fabricated addresses and unsupported earnings information used to obtain coverage
-Immediate, high-dollar billing patterns designed to extract maximum payouts
-Evidence warranting criminal referrals at both the state and federal level

“This was deliberate abuse of a broken federal system,” Brown said. “If you exploit Montana’s healthcare system, we will identify and unwind your fraud, claw back the money, revoke licenses, and prosecute you. Period.”

“Montana is not Minnesota,” Brown said. “If you try to run healthcare scams here, you won’t get excuses, delays, or political cover. In Montana, you’ll get investigations, rescissions, and criminal referrals.”

 
“We don’t tolerate corruption, and we don’t apologize for enforcing the law,” Brown added. “If you exploit vulnerable people or try to game our system, we will come after you.” 
 
“This is what real consumer protection looks like,” Brown said. “Strong enforcement, zero tolerance for fraud, and a healthcare system that works for the people of Montana as opposed to scammers.”

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840 Helena Avenue, Helena, Montana 59601
(main fax) 406.444.3413  I  (securities fax) 406.444.5558
(insurance consumer services fax) 406.444.1980  I  (legal fax) 406.444.3499
(phone) 800.332.6148 or 406.444.2040  I  (email) csi@mt.gov  I  (web) www.csimt.gov

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