Congress takes up AI chatbot safety, addressing AMA concerns; corporate giants eye billions in rural health transformation funds; Queens pharmacy owner gets 5 years in $24.4M Medicare fraud – Morning Medical Update

Congress moves on AI chatbot safety as AMA presses for guardrails

Bipartisan bills introduced this week take aim at chatbot risks for children and deepfake distribution, echoing concerns the AMA raised with lawmakers days earlier.

A wave of bipartisan artificial intelligence (AI) legislation landed in Congress this week, with several proposals touching directly on concerns the American Medical Association (AMA) raised in letters to House and Senate AI caucus leaders just days prior. Sens. Ted Cruz and Brian Schatz introduced a bill that would require AI chatbot companies to offer family accounts allowing parents to monitor children's chat logs and set time limits — a move that follows several lawsuits against OpenAI, including one brought by parents of a teenager who died by suicide after allegedly being coached on self-harm methods by ChatGPT.

Separately, Reps. Ted Lieu and Jay Obernolte introduced broader legislation stemming from the bipartisan House AI Task Force that would crack down on deepfake distribution, protect whistleblowers who report AI safety violations, and support AI research and standard setting. The flurry of legislative activity follows the AMA's April 22 letters calling for mandatory chatbot disclosures, FDA review for tools that cross into mental health diagnosis or treatment, and crisis-detection requirements for vulnerable users. Reuters has more.

Corporate giants are lining up for a piece of the $50B rural health fund

Small community health centers worry the transformation money will flow to tech vendors and consultants before reaching rural patients.

Congress set aside $50 billion for rural health transformation as part of the same legislation that cut nearly $1 trillion from Medicaid. Now, large corporations are positioning themselves to capture a significant share of those dollars before they reach the rural clinics and hospitals the program was designed to help, KFF Health News reports.

All 50 states have received first-year awards, ranging from roughly $147 million to $281 million, but state spending plans show a heavy emphasis on technology upgrades, cybersecurity and electronic health record (EHR) modernization — areas where large government contractors and health IT companies have a built-in advantage. Federal rules cap the share of funding that can go directly to provider payments — money that would help rural hospitals and clinics pay for patient care — at 15% of each state's total award. At least four large corporate coalitions are already pitching services to states, and small community health providers say they are uncertain whether transformation dollars will reach them at all. States must obligate all first-year funding by October 30 and file progress reports by the end of August.

Queens pharmacy owner sentenced to 5 years in $24.4M Medicare fraud scheme

Taesung Kim paid kickbacks to doctors and gift cards to patients to funnel unnecessary prescriptions through his Brooklyn and Queens pharmacies.

A New York pharmacy co-owner has been sentenced to 63 months in prison for laundering proceeds from a $24.4 million Medicare fraud scheme in which he paid bribes to medical providers and cash incentives to patients to generate fraudulent prescription claims. Taesung "Terry" Kim, 61, of Harrison, New York, co-owned several retail pharmacies in Brooklyn and Queens that submitted approximately $24.4 million in claims to Medicare for medically unnecessary drugs between 2015 and 2022. Prosecutors say Kim paid providers in the form of office rent and staff to steer prescriptions to his pharmacies, and paid patients with supermarket gift cards and cash to fill them there. He laundered the proceeds through trading companies designed to give the appearance of legitimate business activity. In addition to his prison sentence, Kim was ordered to pay $24.4 million in restitution and forfeit $6 million in fraud proceeds, including bank accounts and real properties. His co-conspirator, Feng "Jeff" Jiang, 43, was sentenced to 15 months in October 2025.