EXCLUSIVE: ‘Widespread and systematic fraud’: How hospitals hid sex-rejecting procedures on minors – inside the HHS report 

Federal funding for sex-rejecting procedures for minors through Medicaid and the state Children’s Health Insurance Program (CHIP) officially ended Tuesday, fulfilling President Donald Trump’s executive order against so-called gender-affirming care, issued eight days into his second term.

The news follows an August Department of Health and Human Services (HHS) report, Wolves in White Coats: How Doctors and Hospitals Pushed and Profited from the Fraud of ‘Gender Medicine,’ which identified more than $60 million in suspected health care fraud involving so-called gender-affirming care.

In an exclusive interview with Heartlander News, Dr. Aaron Kheriaty, a report co-author, said HHS has “raised the yellow flag” and passed the baton to the Department of Justice to investigate the hospitals, evaluate the suspected fraud and pursue settlements. The DOJ has already reached settlements in six separate cases this year.

The report’s authors analyzed insurance claims from 2015-25 and identified suspected fraud at 225 hospitals, according to an HHS press release. The report also recounts cases such as that of Clementine Breen.

Breen encountered gender ideology at age 12 when she searched online for “why do I hate being a girl,” and a school counselor soon helped her begin socially transitioning.

Doctors at Children’s Hospital Los Angeles classified her as “100% trans” without considering the sexual abuse she had experienced at age 7, according to the report. Health care professionals told her parents they needed to begin medical intervention or risk Breen taking her own life. She began taking puberty blockers at 12, started testosterone at 13 and underwent a double mastectomy at 14.

Breen later began processing her previous sexual abuse through Dialectical Behavior Therapy (DBT) for trauma and stopped taking testosterone at 18.

“Her message to medical professionals is clear: ‘If I can’t give you a reason why I’m doing something, you shouldn’t be doing it,’” the report states. “How can a child consent to losing fertility or the ability to breastfeed if no one checks whether she even understands what that means?” she asks.

Medical coding

The report identified two medical codes that it says were used in suspected fraud: endocrine disorder and precocious puberty, according to its executive summary.

Kheriaty, a practicing psychiatrist and director of the Bioethics, Technology and Human Flourishing Program at the Ethics and Public Policy Center (EPPC), described endocrine disorder as a “preliminary diagnosis” that requires a follow-up diagnosis. He said the condition is rare among minors.

“We should not have seen an explosion, especially among young people who don’t tend to develop those types of problems,” he said, explaining how the authors identified suspected fraud. “Thyroid problems tend to develop later in life. Severe hormonal derangements are not common among children. So that was a sign that the diagnosis was being misused.”

The report identified more than $50 million in claims involving endocrine disorder diagnoses and subsequent procedures for children ages 9-17.

It also identified more than $11 million in claims for puberty blockers for minors ages 13-17 that it said were fraudulently billed under the code for precocious puberty, or the early onset of puberty.

“By definition, anyone 13 or older cannot have a diagnosis of precocious puberty and should not be given puberty blockers at that age for this indication,” the report states.

Rachel Morrison, an attorney, EPPC fellow and report co-author, explained that medical coding consists of diagnostic and billing codes. Gender dysphoria falls under code F64, she said, but claims using that code are less likely to receive Medicaid coverage, depending on the patient’s age and state. According to the report, doctors and hospitals used codes for endocrine disorder and precocious puberty to bill Medicaid for procedures related to gender dysphoria.

Kheriaty also discussed the change in terminology from gender identity disorder to gender dysphoria, saying activists disliked the word “disorder.”

“They still wanted medical interventions for this, so they needed a diagnosis,” he said. “So they tried to have their cake and eat it too. ‘Let’s de-pathologize this and de-medicalize this by calling it gender dysphoria rather than calling it a disorder,’ trying to suggest that these kids don’t have any mental health problems other than the fact that society is not fully embracing their gender identity. But then let’s medicalize the whole thing by demanding medical procedures for trans. So, they’re sort of speaking out of both sides of their mouth.”

Financial incentives

The report argues that suspected fraud in the medical system points to financial incentives for providing sex-rejecting procedures to minors. It notes that pediatrics historically generated less revenue than other medical specialties. More than 80% of pediatric patients report no chronic conditions, according to the report.

The report’s summary argues that so-called gender-affirming care can turn minors into “captive patients” through puberty blockers, cross-sex hormones, surgeries and other procedures.

“Gender clinics changed that calculus by introducing a novel source of revenue: they promised a new stream of continuous revenue for pediatrics, endocrinology and surgical specialties by taking physiologically healthy young people – who otherwise would not need to seek medical attention, and rendering them dependent for life on the medical system,” the report states.

The report also cites the Human Rights Campaign as estimating that such interventions can cost $25,000-$75,000 before surgery and nearly $170,000 with surgery. The average cost of health care for minors is less than $3,000, according to the report.

Coordinated promotion of gender ideology

The report argues that suspected fraudulent medical coding did not emerge independently at hospitals and gender clinics. Instead, it says organizations including the Campaign for Southern Equality, Planned Parenthood, Queer Doc and the World Professional Association for Transgender Health promoted the use of false diagnostic codes to obtain Medicaid coverage.

The report also says these organizations, along with others such as the American Psychological Association, the American Academy of Pediatrics and the Endocrine Society, pushed for societal acceptance of sex-rejecting procedures for children with gender dysphoria.

WPATH recently acknowledged in court that its “Standards of Care” for gender dysphoria were based on opinion rather than medical precedent, according to the report. Hospitals would be wise to “distance themselves” from WPATH, Kheriaty said.

“For the last 10 years, the left and the media has said ‘the science is settled’ on gender medicine. And the ‘experts’ said transgender medicine on kids was the Standard of Care,” Aaron Baer, president of the Center for Christian Virtue and an editor of the HHS report, said in a post on X. “Now that the lawsuits are flying the ‘experts’ are confessing what people with common sense knew: the ‘standards of care’ are just one ideological group’s opinion. And they used this ‘opinion’ to sterilize countless children.”

The report also describes cases in which health care professionals allegedly stopped helping young patients after they expressed dissatisfaction with treatment or a desire to detransition. Several firsthand accounts detail cases in which minors were directed toward sex-rejecting interventions without sufficient consideration of their histories of sexual abuse or home environments.

“Jane was informed that testosterone would deepen her voice and increase body hair,” the report states. “She was not informed that it could damage her liver, cause genital atrophy, lead to urinary dysfunction, or create long-term joint instability. At age 14, abnormal liver labs raised concerns, but no one attributed the damage to testosterone … She was not warned about the chronic nerve pain she now experiences daily – electric shocks, numbness and phantom itching beneath grafted skin.”

Several boys described in the accounts first encountered gender ideology on online gaming platforms such as Minecraft.

Kheriaty said the report initially aimed to examine why hospitals and medical professionals had embraced gender ideology and related procedures. He said gender clinics also brought in social workers, whom he described as “minimally trained mental health professionals,” to “overstamp” or approve practices. The authors suspected widespread fraud only after examining insurance claims and billing codes, he said.

“The fraud was systematic and widespread,” Morrison told Heartlander News in an exclusive interview. “It wasn’t just the one off here, one off there. It was across the country. It was in red states and other states. It was by a lot of major medical institutions, and so they are now on notice that we know this is happening.”

The Biden administration’s role

President Joe Biden also promoted policies supporting sex-rejecting procedures for minors, the report’s authors argued.

“This didn’t happen in a vacuum. There’s these external pressures as well, and one of the major ones of the last six years was the Biden administration,” Morrison said. “The Biden administration was very big on promoting gender ideology and trying to push sex rejection procedures, and so it was this whole of government approach to orders and regulations, statutory and regulatory guidance, litigation positions, enforcement actions and letters.” 

Biden issued executive orders reinterpreting civil rights laws to include gender identity in nondiscrimination policies, Morrison said, adding that gender ideology became a “string attached” to numerous federal policies.

“I would say what happened during the Biden administration was an accelerant to a process that was already underway, and a bullying of anyone else who’s not sort of falling into line with embracing this,” Kheriaty said. “But it didn’t start during the Biden administration.”

Morrison also said Biden directed significant funding to gender studies research at the National Institutes of Health and opposed state laws seeking to protect minors from sex-rejecting procedures.

“I think it’s important to recognize the role the Biden administration played in promoting gender ideology and pushing sex rejection principles, including for children, and turning a blind eye to the harm, turning a blind eye to the lack of medical evidence,” Morrison said.

Neither Morrison nor Kheriaty expressed much concern that a future change in administration would reverse the trend toward greater scrutiny of gender dysphoria treatment.

“I think we’ve hit the peak of the gender craze,” Kheriaty said, adding that the days of its “mainstream medical embrace” are “numbered.” “I think we’re on the downslide. I think the biggest shift is that it’s much more possible now to talk about this publicly, to question it publicly. I think public attitudes have shifted.”