News

Supreme People’s Court intensifies crackdown on medical insurance fraud: Strategic implications for legal and compliance teams

22 August 2025

Key takeaways

China’s Supreme People’s Court is stepping up enforcement against medical insurance fraud, with severe penalties and a focus on protecting public healthcare funds. Recent cases show fraud schemes ranging from hospital-level abuse to digital drug resale and individual collusion. Authorities are targeting the full fraud chain and emphasizing document integrity and coordinated enforcement. Legal and compliance teams should strengthen internal controls to stay ahead of regulatory scrutiny.

On August 5, 2025, the Supreme People's Court of the People's Republic of China released a set of four representative cases (“The Supreme People's Court Releases Representative Cases on the Strict Punishment of Medical Insurance Fraud by People's Courts”) illustrating its firm stance on medical insurance fraud. This release, accompanied by an official commentary (“Strictly punish medical insurance fraud in accordance with the law and safeguard the public's healthcare funds”), underscores the judiciary's commitment to protecting the integrity of the medical insurance fund, described as the public's “lifeline money.” The publication follows a surge in enforcement activity, with 1,156 cases adjudicated in 2024, resulting in 2,299 convictions and the recovery of over RMB 402 million.

Representative cases: Summary table

Case	Facts	Penalties
Case 1: Shanxi Private Hospital Fraud	A privately controlled hospital in Shanxi defrauded the national medical insurance fund by fabricating hospitalizations, inflating drug prices, and falsifying medical records. The scheme involved over RMB 9.7 million falsely claimed medical insurance fund, with RMB 7 million successfully defrauded and RMB 2 million attempted.	Seven defendants were convicted of fraud; Ai, actual controller of the hospital received 13.5 years in prison and a RMB 500,000 fine, with others receiving 4–11 years and fines up to RMB 200,000.
Case 2: Chongqing Hospital Director Fraud	As the actual controller of a designated hospital in Chongqing, Du, orchestrated fraudulent hospital admissions and altered diagnostic reports to claim insurance funds. The fraud involved over RMB 3.9 million in falsely reimbursed medical expenses.	Du was convicted of fraud involving particularly large amounts; sentenced to 12 years in prison and fined RMB 500,000.
Case 3: Drug Resale Network in Jiangxi	Dai operated an unlicensed drug resale network, purchasing and distributing insurance-funded drugs via WeChat and warehouse logistics. The total amount involved exceeded RMB 3.9 million, with over 20,000 boxes of drugs seized in two separate operations.	Dai was convicted for concealment and disguising of criminal proceeds and sentenced to 6 years in prison with a RMB 120,000 fine.
Case 4: Insured Individual and Accomplice Fraud in Nanjing	Tao abused her insurance benefits to obtain and resell unnecessary medications; Xu instructed and purchased the drugs. The total fraud amounted to RMB 300,000 (Tao: RMB 220,000; Xu: RMB 80,000).	Both Tao and Xu were convicted of fraud; Tao was sentenced to 3 years and 2 months in prison with a RMB 30,000 fine; Xu received 1 year and 7 months with a RMB 20,000 fine.

Major findings

The representative cases have shed light on the multifaceted nature of insurance fraud within China’s healthcare system, revealing patterns of abuse that span institutional corruption, digital black markets, and individual collusion.

1. Systemic fraud in medical institutions

The Shanxi case (Case 1) revealed a coordinated scheme involving hospital executives and staff who fabricated medical records and inflated costs to defraud the insurance system. The Court imposed severe sentences, including 13.5 years imprisonment for the ringleader, reflecting a zero-tolerance approach to institutional abuse.

2. Downstream criminal networks

The Jiangxi case (Case 3) exposed a black market for insurance-funded drugs, facilitated through non-contact digital channels such as WeChat. The commentary highlights the public health risks posed by these practices, including drug spoilage and unauthorized resale.

3. Individual and collusive fraud

The Chongqing case (Case 2) involved a hospital director who manipulated diagnostic data to justify unnecessary hospitalizations. The Nanjing case (Case 4) featured an insured individual who exploited her benefits to obtain and resell drugs, aided by a third party. These cases illustrate the breadth of fraudulent behavior, from individual exploitation to organized collusion.

Regulatory focus and enforcement trends

The Supreme People's Court and related authorities have signaled a multi-pronged enforcement strategy:

Full-chain accountability: Targeting upstream organizers and downstream resellers.
Document integrity: Emphasizing criminal liability for falsifying medical records and diagnostic data.
Judicial coordination: The release aligns with the February 2024 joint guidance issued by the Supreme Court, Supreme Procuratorate, and Ministry of Public Security (“Guiding Opinions on Handling Criminal Cases of Medical Insurance Fraud”).
The commentary reinforces the judiciary’s role in “precision strikes” against fraud and its intent to sustain long-term regulatory pressure.

Conclusion

The Supreme People's Court’s release of representative cases and accompanying commentary marks a significant escalation in enforcement in the judicial response to medical insurance fraud. The emphasis on full-chain accountability, document integrity, and coordinated enforcement reflects a long-term regulatory commitment to safeguarding public healthcare funds. Legal and compliance teams—particularly within healthcare and pharmaceutical sectors—should respond with enhanced vigilance and robust internal controls to mitigate risk and safeguard institutional integrity.

Authored by Calvin Ding and Evelyn Ni.