Wade’s Health Law Highlights for October 6, 2026

Fraud & Abuse Enforcement

• A federal jury in Fort Worth convicted a Texas licensed professional counselor for a $26 million TRICARE fraud, kickback, and money laundering scheme. Kevin D. Curry, 64, of Frisco, owned TMS clinics in Plano, Fort Worth, and Fort Walton Beach, Florida, and billed TRICARE for transcranial magnetic stimulation therapy that was medically unnecessary or not provided. Prosecutors showed he paid more than $5.5 million in kickbacks to servicemembers, veterans, and their families to consent to the therapy, held himself out as a medical doctor, and billed under real physicians’ credentials without their knowledge. TRICARE paid about $17 million on more than $26 million in claims, and Curry spent proceeds on hotels, a casino-themed party, and a gold-plated Tesla Cybertruck. He was convicted on nine counts of health care fraud, kickbacks, and monetary transactions in criminally derived property, each carrying up to 10 years in prison. Source: U.S. Department of Justice
• The U.S. Attorney’s Office for the Southern District of Texas filed a False Claims Act lawsuit alleging that a Bay City physician billed Medicare nearly $500,000 for neurostimulator implant surgeries he did not perform. Dr. Michael Neret owns Neret MD Medical Clinic and practices in Bay City and Lake Jackson. The complaint alleges that instead of performing the operating-room procedures billed, non-physician practitioners and non-clinical staff used electro-acupuncture devices during brief office sessions, inserting small electrode wires into patients’ skin and securing the devices behind their ears with adhesive. The government alleges Neret knew the devices were not billable and used the procedures to justify prescribing narcotics for pain management. The HHS Office of Inspector General assisted with the investigation, and the claims are allegations only. Source: U.S. Attorney’s Office, Southern District of Texas

Privacy & Data Security

• The FTC, Utah, and Los Angeles County sued Hims & Hers for sharing consumer health data with advertising companies through web-tracking tools, showing that regulators are pursuing tracking data outside HIPAA. The complaint alleges Hims uploaded hashed customer email addresses to ad platforms, shared pixel and server-side events tied to registrations and purchases, and built audience segments tied to specific health conditions, contrary to its privacy representations and in violation of Section 5 of the FTC Act. A Texas federal court in June 2024 struck down the part of HHS’s 2022 tracking guidance that treated data on unauthenticated website visitors as protected health information. California’s privacy and wiretapping statutes, Washington’s My Health My Data Act, and laws in more than 20 other states now restrict sharing consumer health data, including health inferences, with advertising partners. The complaint alleges that generic event names and pseudonyms did not prevent advertisers from inferring the underlying conditions. Source: Goodwin
• Fairchild Medical Center in California and Boone Health in Missouri agreed to settle class actions alleging their websites disclosed patient data to third parties through Meta Pixel and other tracking tools. Fairchild settled Delgado v. Siskiyou Hospital, Inc., which asserted claims under the California Invasion of Privacy Act and the Confidentiality of Medical Information Act, for a class of about 1,000 people who may claim $25 and a year of identity protection. Boone Health and its parent, CH Allied Services, settled Doe v. Boone Health, Inc. after a Cole County, Missouri court denied their motion to dismiss. The Boone class covers Missouri residents who logged into the patient portal between April 1, 2021, and December 5, 2022, who may claim $20 and receive 12 months of identity protection. Both defendants deny wrongdoing, and the final hearings are set for October 15 and December 1, 2026. Source: The HIPAA Journal

Artificial Intelligence

• HHS updated its business associate guidance to state that a third-party AI chatbot on a provider’s patient portal is a business associate when it provides services involving protected health information. Gouchev Law notes that a business associate agreement cannot authorize uses of PHI the Privacy Rule would bar the covered entity from making, and it often does not address whether a vendor may use prompts, outputs, or PHI to train or improve its model. HHS guidance requires a business associate to have business associate agreements with subcontractors, such as cloud hosts and foundation-model providers, before disclosing PHI to them. In a July 2026 enforcement action, the Office for Civil Rights directed regulated entities to identify where ePHI is located and how it enters, flows through, and leaves their systems as part of an accurate risk analysis. HHS risk analysis guidance calls for reassessing risk when new technology is introduced, and HHS has proposed Security Rule updates requiring regular review and testing. Source: Gouchev Law

Payers & Health Plans

• Texas Attorney General Ken Paxton opened an investigation into Blue Cross Blue Shield of Texas and its parent, Health Care Service Corporation, over denials and delays of urgent and medically necessary care. The office said reports indicate BCBSTX may have denied or delayed coverage for medically necessary or urgent procedures and imposed burdensome prior authorization requirements. In one reported case, administrative denials and utilization review procedures allegedly delayed approval of a newborn’s transfer to a facility able to provide covered urgent treatment. The investigation will focus on BCBSTX’s representations about approving and denying medically necessary claims and whether claims are denied without adequate review. Paxton issued a Civil Investigative Demand to determine whether BCBSTX, HCSC, or related entities violated Texas law, including the Deceptive Trade Practices Act. Source: Texas Attorney General
• Health systems that own health plans often do not measure the economic value of members who are enrolled in the plan and receive most of their care from the system’s own providers, according to VMG Health. VMG Health says systems typically run separate profit-and-loss statements for the plan and the delivery system, so leaders lack a member-level view connecting plan economics to downstream care. Comparing the contribution margin of aligned and unaligned members can inform Medicare Advantage bids, commercial pricing, provider risk-sharing arrangements, and decisions on risk-based capital. Alliance of Community Health Plans members made up nearly 20% of 2026 enrollment in Medicare Advantage contracts rated 4 Stars or higher. A 2026 Health Affairs Scholar study found provider-sponsored ACA Marketplace issuers had medical loss ratios 5.8 percentage points higher than traditional issuers, along with higher quality ratings. Source: VMG Health

Transactions & Due Diligence

• A $56.5 million False Claims Act resolution in June 2026 involving Matrix Medical Network and HealthFair resolved conduct from 2015 to 2017 that predated Matrix’s 2018 acquisition of HealthFair, which had shut down by 2020. The allegations involved invalid diagnosis codes submitted under Medicare Advantage, and DOJ stated there was no determination of liability. DOJ also announced more than $2 million in settlements in June over laboratory referral kickbacks involving several Texas individuals, and said it has recovered more than $61 million since 2019 in cases involving kickbacks disguised as MSO investment distributions. In May, psychiatric hospital operator Oglethorpe Inc. and three executives agreed to pay $32 million and accept a 10-year exclusion over Medicare overpayments its own consultants had identified, and in April, Trinity Hospital paid $1.7 million after self-disclosing office leases with referring physicians that exceeded fair market value. Megan Neel of FBFK Law writes that buyers should test whether payments under MSO, compensation, and lease agreements match the written terms and learn what management did after audits found problems. Source: The Texas Lawbook
• Health systems are becoming an exit option for private equity-backed physician practice management platforms as sponsor-to-sponsor deals slow and hold periods lengthen, according to VMG Health. VMG Health says health systems rarely want an entire multi-state platform and instead buy the markets and specialties that fit their geography and service lines, so sellers should expect different regional buyers to acquire different pieces. Buyers that favor the PC-MSO model often find during diligence that running a second, parallel physician enterprise is more complicated than expected. Changes to physician compensation, overhead, or reimbursement after closing alter post-compensation EBITDA, and a practice moving from risk-based payment to fee-for-service may see its revenue shift. VMG Health identifies transition services agreements and payer contract portability as factors that affect deal value. Source: VMG Health

Drugs & Compounding

• FDA sent warning letters in August 2026 to five online sellers of research-use-only peptides, finding that dosing and injection content on their websites showed the products were intended for human use despite their disclaimers. The letters to NuScience Peptides, Royal Peptides, Peptide Partners, Peak Performance Peptides, and TXP Innovations (d/b/a Tex Peptides) cited tesamorelin and ipamorelin as unapproved new drugs and misbranded under the Federal Food, Drug, and Cosmetic Act, and treated the sellers’ bacteriostatic water as an unapproved drug. A June 2026 Alabama Medical Board notice bars physicians from compounding, administering, or dispensing non-FDA-approved or research-grade peptides and from delegating those acts to nurse practitioners, midwives, or physician assistants, and December 2025 Ohio Board of Pharmacy guidance states that clinics and medical spas may not lawfully possess products labeled for research only. In July 2026, a federal judge in the Northern District of Indiana sentenced Paradigm Peptides owner Matthew Kawa to 70 months in prison for introducing unapproved drugs into interstate commerce with intent to defraud, and he agreed to forfeit $5 million. Kawa had ignored FDA warning letters in 2020 and 2022 and forged certificates of analysis, and his sister, the company’s main employee, received a 16-month sentence. Source: McDermott Will & Schulte

Texas Regulatory & Policy

• A Texas Department of State Health Services workgroup will review the state’s EMS provider and first responder organization licensing rules at a virtual meeting on October 13, 2026. The Governor’s EMS and Trauma Advisory Council EMS Committee 157 Workgroup will take up 25 Tex. Admin. Code § 157.11, which sets requirements for an EMS provider license, and § 157.14, which sets requirements for a first responder organization license. The meeting begins at 2:00 p.m. on Microsoft Teams and is chaired by Dwayne Howerton, RN, LP. Written public comments are due to DSHS by 5:00 p.m. on October 10, 2026, and handouts are limited to two pages. The notice states that AI notetakers and other bots are prohibited and will be removed from the meeting. Source: Texas Health and Human Services
• A Texas Public Policy Foundation commentary urges Congress to pass ten health care reforms through budget reconciliation, including lifting the Affordable Care Act’s restrictions on physician-owned hospitals. Dr. Clifford Porter, MD, PhD, proposes expanding catastrophic plans to all ages and incomes, making Health Savings Accounts available with every plan including Medicare, and extending short-term plans to one year with renewals for up to three years. He would let direct primary care clinics count as primary care for Medicare, clarify IRS rules to make those clinics HSA-eligible, and end higher Medicare payments to hospitals than to independent clinics for the same services. He also calls for ending pharmacy benefit managers’ exemption from the Anti-Kickback Statute and expanding transparency requirements for ERISA-governed employer plans. Porter states the reforms could lower costs by 50 percent. Source: Texas Public Policy Foundation