‘Kingdom of fraud’: LA hospice owners paying healthy couples $300 a month to pretend they were dying, and Medicare footed the bill

Federal officials have arrested eight people connected to healthcare fraud schemes worth $50 million across Southern California, mostly involving hospice care centers. Congress has also launched a formal investigation into what it calls “rampant hospice fraud” in California, saying tens of millions in taxpayer money may have been wrongly paid to companies in the region.

One hospice owner in Artesia submitted over $9 million in fake claims to Medicare and was paid more than $8.5 million. Prosecutors say one couple was promised $300 a month to sign up for hospice care even though they did not need it, receiving items like nutritional shakes, vitamins, and wheelchairs. A Los Angeles nurse allegedly used a hospice center in Tarzana to submit more than $3.8 million in claims, with Medicare paying out around $3.4 million.

According to AP News, First Assistant U.S. Attorney Bill Essayli, a Trump appointee, referred to California as the “kingdom of fraud” when announcing the charges, emphasizing a “zero-tolerance policy for criminals who defraud American taxpayers.” Another person charged in the case is already serving federal prison time from a previous conviction, and her husband was arrested as a co-defendant.

California’s hospice fraud problem runs deep, and federal pressure is finally forcing action

The Republican-led House Oversight Committee sent a letter to California Governor Gavin Newsom asking for documents related to the state’s “oversight and internal controls to detect and prevent fraud for its federally funded hospice programs.” The committee wrote that “alarming evidence of fraudulent activity” has come to light, including agencies overbilling Medicare and enrolling patients without their knowledge.

They also expressed concern that the governor’s administration “does not have sufficient internal controls to prevent and detect fraud and is not conducting proper oversight of these hospice programs.” The letter requests documents and communications between the governor’s office and several state agencies, covering data from January 1, 2019, to present, with a deadline of April 6.

Governor Newsom’s office said California has already taken strong action. A spokesperson noted that the governor signed legislation in 2021 placing a moratorium on new hospice licenses, which is still in effect, to stop “bad actors from entering the system.” The governor also set up a multi-agency hospice fraud task force, which his office says has resulted in more than 280 hospice licenses being revoked over the past two years, with another 300 providers currently under investigation.

Newsom posted on X, saying he was “glad the federal government is finally stepping up to do their part.” Healthcare fraud is not the only area where professionals are accused of serious misconduct, as other cases across the country continue to draw public attention.

Dr. Mehmet Oz, who runs the Centers for Medicare and Medicaid Services, said federal officials “took out” 221 hospices in the last 10 weeks and that they are going to “review every single hospice in California.” Oz had previously posted a video claiming that roughly $3.5 billion in hospice and home care fraud occurred in Los Angeles, saying “quite a bit of it” was run by “the Russian Armenian mafia.”

This led to a civil rights complaint from Newsom’s office, which said Oz had targeted Armenians with “baseless and racially charged allegations.” Oz denies any political motivation, stating that Newsom is simply the governor of a state with an “epidemic of fraud that should be addressed.”

An analysis of records for every hospice in Los Angeles County found that over 700 of the nearly 1,800 hospices there triggered multiple fraud “red flags” as defined by the state. Nationwide, the average amount a hospice bills Medicare per patient is around $13,200, but the typical hospice in LA County bills roughly $29,000 per patient, more than double the national average.

According to CBS News, one hospice in the county billed Medicare $74,000 per patient. The U.S. Department of Health and Human Services’ Office of the Inspector General reported in 2023 that suspected hospice fraud totaled an estimated $198.1 million nationwide. Everyday consumers are also finding that prices don’t always match what they’re charged, whether in healthcare or in daily shopping.

California has extended a moratorium on issuing new hospice licenses through January 2027, after the state missed its deadline to put new emergency regulations into effect. The Trump administration has made the LA area a key focus of its national anti-fraud push, and President Trump signed an executive order in March to create an anti-fraud task force led by Vice President JD Vance.

The House committee’s letter was signed only by Republican members, though Oz’s agency is also proposing a new public hospice scoring system that would use care data to help identify potentially fraudulent facilities.