Nick Shirley Explains How Fraud Scams Work (feat. Dr. Oz)

Nick Shirley explained how durable medical equipment (DME) fraud works in just four simple steps: set up near adult daycares, bill for equipment sent to fake patients, use an enrollment process he says is easier than opening a bank account, and collect payments from Medicare.

The first step shows why these companies gather in certain areas. In last week’s New York investigation, Nick found that social adult daycare centers in Flushing billed Medicaid for thousands of seniors who never attended. Recruiters paid elderly residents cash to add their names to a list. These lists are then used for the next part of the scam. A daycare with a list of Medicaid-eligible seniors has everything an equipment supplier needs, since the same names can be billed again for items like wheelchairs, walkers, knee braces, and hospital beds. Often, the same people run both the daycare and the supply company.

After the names were collected, the next step was to find the equipment behind the billing. Nick visited a residential apartment complex and found three equipment companies registered to one unit: Premier, Lifeline, and Next Gen, all started within a few months. When he knocked, a woman answered and said there was no equipment in the apartment. She did not know what her husband sold and said he would return in about half an hour. Nick reported finding only a mother and her children there and none of these three companies has been charged with a crime.

Getting approved to bill Medicare should be difficult. The rules for equipment suppliers, require a physical location open to the public, staffed during posted hours, with visible signs, and at least 200 square feet for storing records. Suppliers must be open at least 30 hours a week and fill orders from their own inventory. Each location must enroll separately and have its own billing number. Suppliers cannot share a location with certain other Medicare suppliers, and CMS can inspect the site. An apartment with a family living there and empty shelves does not meet any of these rules, yet three companies at that address still got approved.

Dr. Mehmet Oz, the CMS Administrator, joined Nick on the same blocks during the New York investigation and looked over the findings. Oz said that having three suppliers at one residential address with no equipment is a major warning sign. He explained that South Florida has twice as many equipment suppliers as McDonald’s locations because starting one is easier than opening a bank account, and the person listed on the account is often not the real owner.

Oz estimated that these operations can make $2 million to $8 million a month once they grow, and the number of suppliers increases fast. This rapid growth is why enforcement often arrives too late. The DOJ’s 2026 National Health Care Fraud Takedown made durable medical equipment a top priority. CMS suspended 1,079 providers from billing federal programs and revoked billing privileges for 1,403 more. Federal prosecutors in Brooklyn have been charging people for this scheme for years. In one case from 2017, the operator of several equipment companies pleaded guilty after admitting the companies never delivered anything but still submitted almost $1 million in false claims.

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This is what we call the Nick Shirley Effect. When Nick shares a video, federal funds are frozen, agents show up, and prosecutors step in. By his count, he had uncovered over $250 million in fraud by America’s 250th birthday, and his recent work in New York added about $190 million more.

Fahima Egeh Mahamud is a key figure in this story. She ran Future Leaders Early Learning Center in Minneapolis, one of ten daycares featured in Shirley’s December video. Last year, she received more Child Care Assistance Program money than anyone else in Minnesota. In May, prosecutors charged her with taking over $4.6 million through about 13,000 false reimbursement claims, plus another $850,000 from a federal nutrition program. On July 9, she pleaded guilty to wire fraud and conspiracy to defraud the United States.

Just weeks after Nick’s Minnesota video, the Trump Administration stopped more than $259 million in Medicaid payments to Minnesota. In April, agents searched about 20 childcare centers. Vice President JD Vance, who leads the White House fraud task force, has since held back over $1.3 billion in California Medicaid funds and says his team uses Shirley’s videos to start investigations.

This month in New York City, Dr. Mehmet Oz, who oversees Medicare and Medicaid nationwide, joined Shirley as he filmed. New York will likely see the next arrests. Federal prosecutors have already charged Inwoo Kim and Daniel Lee, both from Flushing, before Shirley arrived, but shows what is still to come. New York’s Department of Health has referred 387 adult daycare centers for investigation and sent about a third to the attorney general.

Authorities are stepping up their efforts to prepare for what’s next. CMS stopped new enrollments for medical equipment suppliers in February, and for hospices and home health agencies in May, after suspending payments to 773 hospices and 23 home health agencies in Los Angeles. The Justice Department has added 15 prosecutors focused on Medicaid fraud. U.S. Attorney Daniel Rosen summed it up when the latest Minnesota charges were announced: his office now has more fraud prosecutors on this than ever before, and, as he said, stay tuned.

So what does all this tell us? It shows that the "Nick Shirley effect" is in full working order. The pattern has become predictable enough that we can now point at what happens next. It is truly incredible what Nick has accomplished over the past year and the result of his investigations.

This month, our reader survey showed two questions came up more than any others: Which fraud bills are moving, and what should someone do if they think they have spotted fraud?

Two federal bills are especially important, but they are at very different stages. The STOP Child Care Fraud Act (S.4959) would require states to pay child care providers only for confirmed attendance, not just paperwork. This would close the same loophole used in the Minneapolis case involving Fahima Egeh Mahamud. The Deporting Fraudsters Act (H.R. 1958) would make benefits fraud a specific reason for deportation. The House passed it 231 to 186 in March, with all Democrats voting no. Democrats argued it is unnecessary and could threaten due process. The bill needs 60 votes in the Senate to pass.

There is still one bill in California that people can influence. AB 2624 passed the state Assembly by a vote of 57 to 19 and is waiting for a floor vote in the state Senate, where it has been since a committee hearing in early July. The bill would allow people connected to immigration support services to request the removal of public footage of themselves and would fine anyone who publishes it. The bill's author, Assemblymember Mia Bonta, is married to Attorney General Rob Bonta, whose office would enforce the law. She says the bill has “no provisions related to journalism or fraud.” Critics note that California already bans doxxing and threats, and argue that this bill could affect investigations themselves.

You can read our full coverage of the Stop Nick Shirley Act.

These cases almost never start with just one person. For example, the $120 million case against Inwoo Kim and Daniel Lee in New York City began with tips from New Yorkers and emails about the daycare centers, according to the complaint. When enough people reported the same thing, investigators took notice. This is where readers can make a real difference.

While there are many different agencies to submit fraud reports online, the main ones are: HHS Office of Inspector General for Medicare and Medicaid; the USDA Inspector General for SNAP and food assistance; the Social Security Administration's Inspector General for retirement and disability benefits; and GAO FraudNet for federal money that fits nowhere else.