June 4 (Reuters) - Hawaii's attorney general stands to

lose around $3 million in federal funding to fight Medicaid

fraud after failing to consistently bring criminal cases, the

Trump administration said on Thursday, in an escalation of Vice

President JD Vance's campaign against healthcare fraud.

The U.S. Department of Health and Human Services Inspector

General March Bell sent a letter to Hawaii Attorney General Anne

Lopez informing her that her state's Medicaid Fraud Control

Unit, a body that investigates and prosecutes fraud by

healthcare providers, has been denied federal certification. HHS

will no longer fund the unit, which has been receiving around $3

million annually, Bell wrote.

Without a federally certified Medicaid fraud unit, the

state's broader Medicaid funding could be in jeopardy.

Hawaii's unit obtained no criminal indictments or

convictions for Medicaid fraud or patient abuse and neglect

between 2022 and 2025, despite increased enrollment in the

program, Bell wrote.

Hawaii will seek reconsideration of the decision, the state

attorney general's office said.

"We recognize the seriousness of the HHS's concerns and are

treating this matter with the urgency it deserves," Lopez's

office said in a statement.

The move is part of a broader Trump administration push on

Medicaid fraud enforcement. Vance accused Hawaii last month of

giving fraudsters "free rein," and warned of consequences for

states failing to effectively police the program. "If we

continue to find problems, we can turn off other resources

within their state Medicaid programs as well. Our goal here is

not to do that," he said at the time.

More than 360,000 Hawaii residents are enrolled in Medicaid,

the health program for low-income Americans. Hawaii received

$2.2 billion in federal Medicaid funds in 2024, according to the

agency that advises Congress on healthcare spending. Nationwide,

Medicaid fraud units were responsible for more than 4,800

criminal convictions of people and businesses between 2022 and

2025, according to the same agency.

Attorney General Lopez has pushed back against the Trump

administration's characterization. She has previously said the

state has not ignored Medicaid fraud, pointing to $14 million

recovered in civil cases since 2021. The state also charged two

people with criminal healthcare fraud earlier this year.