Just when I thought the dust settled, another layer was added to the confusion.
It’s nothing short of a crisis. On June 4, the Chair of the U.S. Federal Trade Commission, Andrew Ferguson, made an announcement from Ohio that throws Hawai‘i’s Medicaid program in the middle of a growing national fight over fraud.
As a result of Ferguson’s announcements, the state agency certified to investigate Medicaid fraud in Hawai‘i is now decertified and defunded. In the federal government’s eyes, it functions with no credibility.
“For more than a decade,” Ferguson claimed, “Hawai‘i’s Medicaid Fraud Control Unit has received millions and millions of dollars to fight fraud and has consistently been one of the lowest-performing fraud units in the country.”
The crisis centers around Hawai‘i’s Medicaid Fraud Control Unit (MFCU), a little-known agency nestled under the Hawai‘i Department of the Attorney General charged with investigating fraud.
The crisis has unfolded gradually over the past 10 years and now finds itself at an unprecedented inflection point.
“They have been the subject of continued demands to improve their performance since 2014 — dating back to the Obama Administration — and from 2021 to 2025, Hawai‘i’s Medicaid funding went up 27%. Their Medicaid enrollment went up 40%, and they did not produce a single conviction or obtain a single indictment of a fraudster from 2021 to 2025.”
The Attorney General of the State of Hawai‘i, Anne Lopez, had previously clapped back at the Trump administration's accusations against Hawai‘i just a week earlier. On May 26, the California Department of Justice hosted a press conference with several Democratic Attorneys General to address a ‘last-minute’ invitation extended by Vice President Vance to join the White House’s Medicaid Fraud Task Force. Attorney General Lopez was flanked by her counterparts from Wisconsin, New York, New Jersey, and California.
For context, President Donald Trump had established an Anti-Fraud Task Force on March 16 to be chaired by Vice President J.D. Vance. For politically disparate Hawai‘i, the gravity of the Task Force’s importance was brought to bear on May 13 at a press conference on Medicaid fraud hosted by Vice President Vance.
“The Hawai‘i Medicaid program has received billions and billions of dollars from the federal taxpayers,” Vance observed at his May conference. “Hawai‘i taxpayers have paid in a lot of money into this program over the last years as well. Guess how many convictions or indictments Hawaii has had over the last few years in its Medicaid fraud program? The answer is zero.”
For those who don’t know, Medicaid is a joint federal-state program administered by the states. Each state has a designated Medicaid agency (Med-QUEST in Hawai‘i’s case, which functions under the Hawai‘i Department of Human Services). Hawai‘i will then pay different providers and/or health plans to provide health care and report those expenditures to the federal government through the Center for Medicare and Medicaid Services (CMS). Hawai‘i then seeks federal funds to match some of the costs borne by the State.
According to KFF, the U.S. federal government covered 71% of Hawai‘i’s Medicaid costs ($2.2 billion) in Fiscal Year (FY) 2024, leaving the State of Hawai‘i to cover the remaining 29% ($890 million). It’s a lot of money, leaving fraud as a consistent possibility.
Gov. Green brushed off Vance’s concerns on May 18. “He didn’t take the time to call me at all,” Green quipped. “That’s his prerogative.”
Gov. Green, for now, is committed to avoiding squabbles with the federal government. Where health care is concerned, he’s enjoyed a largely warm relationship with the Trump administration.
Gov. Green and the Trump Administration
To date, Governor Josh Green has expressed a ready willingness to engage with the Trump Administration on a select basis.
This relationship has notably extended to the CMS headed by Dr. Mehmet Oz. CMS Administrator Oz has directly engaged with Governor Green on more than one occasion. On July 23, 2025, the Governor’s Office announced that Green would facilitate a discussion with CMS Administrator Dr. Mehmet Oz (alongside Republican Vermont Governor Phil Scott).
CMS, so far, has also shown a willingness to fund rural health efforts across the United States, including Hawai‘i. On December 29, 2025, it announced that the State of Hawai‘i would receive nearly $189 million in funding to “expand access to care in rural communities, strengthen the rural health workforce, modernize rural facilities and technology, and support innovative models that bring high-quality, dependable care closer to home.”
Hawai‘i’s specific plan focuses on six specific areas: (1) a Rural Health Information Network; (2) the Pili Ola Telehealth Network; (3) a Rural Infrastructure for Care Access (RICA) network; (4) a Rural Healthcare Workforce Pipeline; (5) a Rural Respite Network of five separate sites designed to reduce hospital stays; and (6) a Rural Value-Based Innovation and AHEAD Readiness Fund to encourage “value-based care and population-health models.”
Ties between Gov. Green and Dr. Oz, at least for now, appear to be warm. Oz even directly praised Green for collaborating with him for National Walking Day on March 19, just a few days after the formation of Vice President Vance’s Task Force.
Despite Vance’s attacks on Hawai‘i, Gov. Green pulled back the veil to explain that he still maintains good relationships with the Trump administration. As he explained in one May interview, “I actually spoke right after that interview with the head of CMS – that’s Dr. Oz – to share what we’re actually doing.”
Hawai‘i True Medicare Fraud Challenges
Hawai‘i has a Medicaid Fraud Control Unit (MFCU), organized under the State of Hawai‘i’s Department of the Attorney General. To that end, criticism of our MFCU is not new.
In fact, managing the MFCU is a wicked issue with a decade of history. During the Obama Administration, an October 2014 review conducted by the HHS OIG found that “only two of the [MFCU]’s seven investigators were hired as long-term employees (as required), the Unit did not have an auditor, it did not have written policies and procedures for its operations, and it did not have a required training plan for its professional employees.”
The same report found that the MFCU failed to “regularly communicate with Federal law enforcement agencies, it worked outside of its grant authority, and it did not exercise fiscal control of its resources.”
Five years later, another review found that the MFCU “experienced significant turnover of investigators and lacked sufficient Medicaid fraud cases to adequately train new and inexperienced investigators.” Furthermore, the MFCU appeared to receive “few fraud referrals from the Medicaid Program Integrity Unit and other stakeholders, which limited the number of cases available for the Unit to investigate and prosecute.”
Similarly, the Center for Program Integrity within the HHS Centers for Medicare & Medicaid Services called for better cooperation in two reports issued in June 2014 and March 2023, respectively.
In April 2026, the U.S. Department of Health and Human Services (HHS) dispatched its Office of the Inspector General’s (OIG) MFCU Oversight Division to review the state’s work on Medicaid fraud. Per the Attorney General’s office, the review “identified a number of challenges that have impacted its ability to initiate criminal charges and obtain convictions.”
To that end, the division has ample room for improvement. Efforts to streamline the MFCU’s work include “increased collaboration with the unit’s state and federal partners to detect and investigate Medicaid and Medicare Fraud in Hawai‘i, accelerated recruitment of new investigators, and developing tools for investigation.”
On May 13, the HHS OIG sent a letter directly to Hawai‘i’s Attorney General. The Inspector General, T. March Bell, doubled down on the Vice President’s rhetoric and went a step further. Bell confirmed that he had directed his office “to engage in a robust review of [Hawai‘i’s] MFCU.” To that end, he further confirmed that he “will be reaching out to you personally to review the effectiveness of your MFCU, as well as its compliance with program requirements.”
“Hawaiʻi has not ignored Medicaid fraud,” Attorney General Anne Lopez charged on May 14. “Our Medicaid Fraud Control Unit has secured or helped secure more than $14 million in judgments, settlements, and recoveries since 2021, filed recent criminal charges, and is actively working with federal and state partners to strengthen investigations and prosecutions.”
It is still true that the State of Hawai‘i did not have any convictions resulting from the MFCU. This fact is confirmed by a spreadsheet furnished in an annual report released by the HHS OIG. Small states like Montana, Vermont, North Dakota, New Hampshire, and Delaware had at least one conviction. The same sheet shows that Hawai‘i managed to engage in 388 fraud investigations, although not a single investigation resulted in a single indictment.
Despite his methods, the vice president's press conference is shining attention on an inconvenient, long-term issue with serious consequences for Hawai‘i’s fiscal health.
For now, Attorney General Anne Lopez’s decision to align with other Democratic Attorneys General may run out of step with Gov. Green’s conciliatory approach to folks like Dr. Oz and the Trump Administration’s increased focus on Hawai‘i.
It’s a game of money overshadowed by the inclination of national officials to make an example of Hawai‘i. To weather this storm, Hawai‘i’s money — and Hawai‘i’s health — require more attention from Hawai‘i’s people.
Perry Arrasmith can be reached at hello@perryarrasmith.com.
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