The California Hospice Fraud Scandal Is Worse Than Anyone Thought
More Fraud in California?
In recent weeks, a political firestorm erupted between California Governor Gavin Newsom and Dr. Mehmet Oz, the administrator of the Centers for Medicare & Medicaid Services. The conflict began after Dr. Oz publicly highlighted widespread hospice fraud in Los Angeles County, pointing to clusters of suspicious hospice providers and describing what federal investigators believe may be a massive scheme exploiting the Medicare hospice benefit. His remarks quickly drew national attention to a problem that investigators say has been growing for years.
Governor Newsom responded forcefully. His administration launched a civil rights investigation into Dr. Oz’s comments, accusing him of making “baseless and racially charged allegations” that could discourage members of the Armenian community from participating in hospice and home-care programs. Newsom’s office also argued that the comments had already caused real-world harm, pointing to reports that an Armenian bakery featured in the video saw a drop in business after the remarks circulated.[1]
At the same time, the Governor acknowledged that hospice fraud does exist in California – but maintained that the state has been aggressively addressing the issue. “We’ve identified and cracked down on hospice fraud for years,” the governor said, “taking real action to protect patients and taxpayers.”[2]
So, who is right? Were Dr. Oz’s comments discriminatory, and has California cracked down on hospice fraud? To no one’s surprise, the answer to both of those questions is a resounding no, and I’m getting into all the details for you today.
CBS’s Bombshell Investigation
Last week, on Tuesday, March 10th, an ongoing investigation resulted in a bombshell report by CBS News that revealed Dr. Oz’s comments were not, in fact, “baseless and racially charged allegations,” – but are all true, and are much worse than originally thought. What exactly did they find?
Just in Los Angeles County alone, nearly half of all licensed hospice care organizations show significant flags for fraud. Specifically, out of 1,800 hospice care facilities, over 700 of them are thought to be completely fake[3] – which means that they are overbilling Medicare by hundreds of millions of dollars per year and pocketing the money. That is a massive amount of fraud, and it doesn’t even span all of California yet – just one county.
To understand what’s going on here, we have to back up and get context. Because fraud doesn’t happen overnight, and in this case it’s been an ongoing, years-long process that is just now at the tipping point.
What is Hospice Fraud?
We have to first understand the type of fraud being committed, and to do that we have to define what hospice care is and how it works with the Medicare system. You are probably familiar with the term hospice, but in case not – hospice is a type of medical care provided for patients who are expected to live six months or less. Hospice is the switch from focusing on curative treatment for a patient to palliative care – meaning hospice workers focus on trying to relieve a patient’s symptoms and give patients the best quality of life as possible in their final months or days.[4]
How this interacts with Medicare is that hospice providers are paid by the Medicare program a daily, per-patient rate regardless of if care or how much care is delivered. In Los Angeles specifically, a hospice is paid by the federal government $260 per day for each day a hospice patient is under its care.[5] Patients with Medicare can get hospice care benefits if their primary doctor and the hospice physician certify them as terminally ill, with a medical prognosis of 6 months or less to live. After 6 months, you can continue to receive hospice care if the hospice doctor recertifies that you are still terminally ill. There is no limit on how long Medicare will cover hospice care.[6]
So, what schemes are fraudsters using to scam the hospice system? There are a few different tactics at play:
1. The first is to enroll ineligible patients, referred to as “ghost” patients. This is a classic example of fraud – it involves falsely certifying patients who are not terminally ill, which means hospices allow improper billing for years, and they pocket the money not being spent on real patients – because those patients never existed.[7]
2. A second scheme is to enroll real people in hospice without their knowledge. This typically affects older people, as scammers target them to obtain their Medicare identification numbers, sell those numbers to fraudulent hospices, and receive a kickback from the hospice for the benefits paid out by Medicare.[8]
3. A third scheme is for hospices with real patients, who are genuinely eligible for medical services, to “upcode” the patient’s care. This means billing for expensive levels of care when only basic care was actually provided.[9]
4. A fourth scheme is something called “churn and burn,” where a new hospice opens up and starts enrolling patients and billing for them. But once that hospice is audited – it shuts down, keeps the money, transfers its patients to a new hospice, and starts billing for them again.[10]
5. And last, but certainly not least as this is a core scheme happening right here in California, are shell companies and ghost addresses. This is when fraudsters set up businesses that exist purely on paper via registered addresses with no actual patients, staff, or operations. This fraud scheme often relies on shell companies and stolen personal information obtained through illegal markets.[11]
California’s MASSIVE Failures
That is what hospice fraud is – so what exactly has happened in California? What did CBS Investigators uncover, and how long has it been going on for?
As I mentioned earlier, by analyzing state licensing records and Medicare billing data, CBS investigators found that more than 700 hospice providers in Los Angeles County show multiple indicators of fraud, out of roughly 1,800 licensed hospice agencies operating in the county. These warning signs include companies sharing the same addresses, disconnected phone lines, extremely small or nonexistent offices, and unusual billing patterns that suggest patients are being enrolled in hospice care improperly. These follow patterns of the exact schemes I just explained.
Perhaps most striking red flag for fraud was the geographic concentration. Investigators found nearly 500 hospice companies operating within a three-mile radius in parts of Los Angeles. In one building alone, 89 hospice companies were registered to the same address. Why in the world would there need to be that many hospice providers in the same vicinity?! When reporters visited this particular site, they found empty suites, piles of unopened mail, and offices that appeared never to have provided medical care at all.[12]
The investigation also uncovered cases in which patients were enrolled in hospice without their knowledge, sometimes discovering the fraud only after being denied other medical services because Medicare records listed them as terminally ill. Altogether, CBS linked suspicious billing patterns to roughly $198 million in Medicare payments connected to these providers, and that’s just the beginning! Investigators are stressing that the true costs are likely much higher, which illustrates a system that appears to have been exploited for years to get to this point.[13]
Can we just pause and realize how insane this is? There are hundreds of hospices that are not real, and they are billing the federal government for funding that your tax dollars go toward paying. This is completely unacceptable! How is this happening?
Well, this isn’t a new problem, and it didn’t happen overnight. Auditors and reporters have been raising the alarm – which has fallen on DEAF ears – for years. A 2022 California State Auditor report found that hospice agencies ballooned by 1,600% over a 10-year period, which is very suspicious growth. The audit report cited the California Public Health Department's "lax" licensing process for the explosion in hospice numbers – and even exposed that the Department did not deny license applications in instances where its own staff raised concerns.[14]
From the Licensure Act's enactment in 1990 until January 1, 2022, California law did not require the California Department of Public Health to assess the need for hospice services when issuing hospice licenses.[15] This means that while LA County’s senior population only increased by nearly 40% since 2010, that hospice agencies increased by that 1,600% figure.[16] I literally can’t even fathom that. If a population is growing by only 40%, why in the world would you need an uptick in over 1,000% growth for associated services?! The fact that the law did not require this type of consideration when approving a license is asinine – truly, our legislators turned a blind eye to fraud in a blatantly foolish way. And when we compare these figures to other states, we see how ridiculous it really is! As of 2019, Los Angeles County had roughly 1,600 aged persons per hospice agency. The rest of California excluding LA County had one hospice agency per 5,900 seniors. New York had one hospice per 72,000 seniors; Florida had one per 95,000.[17]
But it gets worse, because what is even more stunning than the state just not even considering need or hospice growth when issuing licenses is that fact that there were no regulations in place to oversee CDPH’s licensing and monitoring…at all. The Department was in charge of overseeing the hospice industry, but they didn’t create any procedures, any policies, or any regulations to ensure that the facilities they were licensing were legitimate. There were no minimum standards for things like nurse-to-patient ratios, staff travel distance limits, or management personnel qualifications.[18] It’s no wonder rampant fraud was able to be committed! The department had ZERO controls in place to prevent it – because they do not take their jobs or their responsibility with taxpayer money seriously.
Now, people raised red flags. Audit reports uncovered these risks, but more than that, staff – even within the agency – raised complaints about potential fraud being perpetuated. Yet, CDPH approved licenses for for-profit facilities even after becoming aware of these problems, thus enabling "operators who are possibly fraudulent to continue functioning, placing patients at serious risk."[19] Their investigation of was often incomplete and slow, which increased the risk that patients would receive substandard care or that hospice agencies would engage in fraudulent activity – and they did not seek statutory enforcement measures to address problems that it actually identified through its oversight.[20]
All in all, the California Department of Public Health completely dropped the ball here. They didn’t just drop the ball – the ball never existed, they never had it to begin with. They are not a serious agency, and this alone should shut them down. But sure, let’s trust them to set a comprehensive and honest vaccine schedule that you’re required to give your children under California law. But I digress.
I just want us to all think about what this means. You pay for the Medicare system through payroll taxes and through general taxes. You pay real money – money you don’t get to see in your bank account, or set aside to save for a house, or pay for your monthly grocery budget, or put toward your child’s future. You pay real money, and because of the lax laws and policies in California, that money goes into the pockets of people committing fraud – committing a crime – NOT toward seniors or terminally ill patients who need support in the final months of their life. This is because of an employee sitting at CDPH approving hospice licenses without any oversight, without guidance, without second thought – and it falls under the jurisdiction and responsibility of your Governor and your Legislature…who claim there is no fraud in California. Absolutely unthinkable.
California’s (Inadequate) Response
Now, our beloved Governor and Attorney General will claim – and are already claiming in response to this report – that they did take action on hospice fraud, and that they have worked to prosecute over 200 fraudulent hospice care organizations. So, what steps were taken in response to past audit reports, and were they effective to slow the fraud at least in the last 5 years?
The biggest action taken by Newsom was the passage of Senate Bill 664 – this was a ban on all new hospice licenses from 2021 through January 1, 2027.[21] This is the administration's biggest and most defensible action. In addition to that, CDPH revoked the licenses of over 280 hospices in the past two years. And CDPH is currently in the process of adopting emergency regulations that include establishing those requirements and controls that it has been missing for how to evaluate and ongoingly monitor hospice organizations.
Although the current administration would point to these actions in defense, none of these measures have gone far enough to root out existing fraud or even to fully prevent ongoing or future fraud. The first flaw with our state’s response is that a blanket ban on future state hospice licenses did not at all address the thousands of fake agencies actively committing fraud.[22] It’s like locking your door after criminals have already entered your home – it’s great to keep more criminals out, but you already have an existing, massive problem inside. On top of that, while Attorney General Rob Bonta touts that they have revoked 280 hospice licenses – but that is miniscule when you consider that the CBS investigation found fraud indicators were still growing and expanding in early 2026. Not to mention this came years later – enforcement action was only taken after the state audit report in 2022, over three years after Governor Newsom took office and after years of complaints and fraud indicators.
But honestly, the most astonishing failure here is the fact that they are still working on enacting guidelines to regulate the approval and oversight of these facilities. They have had years – literally years – to establish the regulatory guidance, and as of March 2026, it is still in progress – three months after the deadline that previous legislation had given the Department to enact them by. How in the world do they still not have oversight and controls in place? Seriously – what are they doing over there?
Regardless of what Gavin Newsom says, the CBS investigation reports that fraud indicators are not shrinking after these crackdowns – they are spreading. For example, they found 75 people simultaneously tied to five or more companies.[23] That’s current – that’s not a past issue that the state has since dealt with. If that isn’t a clear indication of fraud and monetary incentive, I don’t know what is. Add on top of that the fact that, despite the moratorium, new hospices are still getting licenses. A ProPublica investigation found that California, Texas, Nevada, and Arizona account for more than two-thirds of the nation's newly Medicare-certified hospices. In one case, 15 new hospices, all operating from the same building in Los Angeles, received Medicare certification.[24] This is because California law did not address all the channels by which fraudsters can be certified to receive Medicare, leaving loopholes they could continue to perpetuate fraud through while touting that they have fixed the problem.
All in all, it’s safe to say that when Gavin Newsom says he has worked to crack down on fraud, he has done the bare minimum to use as a political talking point – but he has not taken real steps that any person serious about uprooting and discarding of fraud would do.
What should he have done? Here are a few options, as outlined by the audit report that initially uncovered all of this four years ago:
1. Actually implemented regulatory guidance and strict reforms to govern this process and prevent bad-faith actors from continuing to operate in our state,
2. Audited existing providers immediately instead of just banning new hospice licenses,
3. Imposed real financial penalties on fraudulent providers to punish and dissuade this type of crime, and
4. Coordinated with federal organizations – like the Center for Medicare and Medicaid Services (CMS) to ensure that fraudsters couldn’t take any path, state or federal, to gain licensing.
Newsom's actions were reactive, not proactive. He enacted legislative responses that came after investigative journalism forced the issue and focused primarily on stopping new bad actors rather than aggressively rooting out the organized fraud network already embedded in the existing provider pool. California knew what was happening, but it did not take steps to move fast or hard enough to stop it – which is how we are at the point of estimating billions of dollars in damage across the state.
What Happens Now?
So…what happens now? Here’s the thing: no one knows whether this moment will lead to genuine structural reform, or if it will simply fade once the news cycle moves on. The 2022 audit that first exposed a lot of this was also described at the time as a watershed moment – and then we see that fraud grew in the years that followed. Which is why we cannot let this slide under the radar, unnoticed and unaddressed.
And, as always, we must hold our leadership accountable. Our Governor, our Legislature, and our state Departments, should feel our outrage at this – our outrage at how they have allowed criminals to defraud you. Contact your elected representatives. This is a federal program administered by a state – which means you have multiple levers. For LA County residents:
Your U.S. Senators oversee federal Medicare funding and CMS.
Your U.S. House member as the House Energy and Commerce Committee is actively investigating this right now and has been receptive to constituent pressure.
Your California State Assembly and Senate members can pressure CDPH to finalize the overdue emergency regulations before the moratorium expires in January 2027.
A phone call or written letter to a district office carries weight, and it communicates to our leaders that we will not stand for this criminal negligence. I’ve included a draft letter below – please take the time to send it either as a letter or email to your representatives, who are also linked below.
Fraud on this scale only flourishes when no one demands better; now is the moment to make clear that Californians expect accountability. And then remember – come November, vote this behavior out.
Take Action Today:
How to find & contact your representatives: https://www.thecaliforniaconversation.com/articles/resources
[1] Ding, Jaimie, and Ali Swenson. “Newsom Files Civil Rights Complaint Against Dr. Oz in Trump Feud | AP News.” AP News, January 30, 2026. https://apnews.com/article/dr-oz-newsom-fraud-medicare-hospice-trump-611ee3156c37f2cff70190fb417a694d.
[2] Ibid.
[3] Gold, Rachel, Laura Geller, Adam Yamaguchi, and Graham Kates. “CBS News Investigation: Hundreds of LA Hospices Show Multiple State Indicators of Fraud, 3 Years After California Vowed Crackdown,” March 10, 2026. https://www.cbsnews.com/projects/2026/hospice-fraud/.
[4] “Hospice | CMS,” n.d. https://www.cms.gov/medicare/payment/fee-for-service-providers/hospice.
[5] La Jeunesse, William. “Los Angeles Hospice Fraud Exceeds Billions: Medicare Providers Exploit Federal System With Phantom Companies.” Internews Cast, January 31, 2026. https://internewscast.com/news/us/los-angeles-hospice-fraud-exceeds-billions-medicare-providers-exploit-federal-system-with-phantom-companies/.
[6] Anderson, Steve. “Does Medicare Cover Hospice Care? | medicareresources.org.” Medicareresources.Org (blog), December 4, 2025. https://www.medicareresources.org/faqs/does-medicare-cover-hospice-care/.
[7] Kneipp, Rebecca. “Investigating Hospice Fraud: Common Schemes and Red Flags.” Healthcare Fraud Shield, January 14, 2026. https://www.hcfraudshield.com/investigating-hospice-fraud/.
[8] Krown, Kira. “You Heard That Correctly: Scammers Are Committing Hospice Fraud.” Federal Trade Commission, December 13, 2024. https://consumer.ftc.gov/consumer-alerts/2024/12/you-heard-correctly-scammers-are-committing-hospice-fraud.
[9] La Jeunesse, “Los Angeles Hospice Fraud Exceeds Billions: Medicare Providers Exploit Federal System With Phantom Companies.”
[10] Corrigan, Dara, and Dora Hughes. “CMS Is Taking Action to Address Benefit Integrity Issues Related to Hospice Care.” Centers for Medicare & Medicaid Services, January 13, 2025. https://www.cms.gov/blog/cms-taking-action-address-benefit-integrity-issues-related-hospice-care.
[11] Objectivist. “CBS News Blows up Los Angeles Ghost Hospice Fraud Scam,” March 12, 2026. https://www.objectivist.co/2026/03/cbs-news-blows-up-los-angeles-ghost-hospice-fraud-scam-watch/.
[12] Gold et al., “CBS News Investigation: Hundreds of LA Hospices Show Multiple State Indicators of Fraud, 3 Years After California Vowed Crackdown.”
[13] Ibid.
[14] Cathell, Mia. “Bogus Businesses and ‘Lax’ Oversight: How Hospice Fraud Has Flourished in California.” Washington Examiner, February 9, 2026. https://www.washingtonexaminer.com/in_focus/4448139/how-hospice-fraud-flourished-california/.
[15] Auditor of the State of California. “California Hospice Licensure and Oversight,” March 29, 2022. https://information.auditor.ca.gov/reports/2021-123/index.html.
[16] Muoio, Dave. “California Auditors Outline Rampant Fraud Endangering LA County Hospice Patients.” Fierce Healthcare, March 30, 2022. https://www.fiercehealthcare.com/providers/california-hospice-fraud-los-angeles-county-audit-auditors-outline-rampant-fraud.
[17] Ibid.
[18] Auditor of the State of California, “California Hospice Licensure and Oversight.”
[19] The Associated Press. “Audit: Lax Oversight, Fraud Within California Hospice System.” Long Beach Post News, March 29, 2022. https://lbpost.com/news/audit-lax-oversight-fraud-within-california-hospice-system/.
[20] Auditor of the State of California, “California Hospice Licensure and Oversight.”
[21] Governor Gavin Newsom. “In The Four Years Since Governor Newsom’s New Hospice Provider Ban Took Effect, California Has Revoked More Than 280 Licenses.” Governor of California, January 27, 2026. https://www.gov.ca.gov/2026/01/27/in-the-four-years-since-governor-newsoms-new-hospice-provider-ban-took-effect-california-has-revoked-more-than-280-licenses/.
[22] Curtis, Amy. “CBS News Exposed the Massive California Hospice Fraud Happening on Gavin Newsom’s Watch.” Townhall.Com, March 11, 2026. https://townhall.com/tipsheet/amy-curtis/2026/03/11/cbs-news-ca-hospice-fraud-n2672652.
[23] Hart, Justin. “BREAKING: Big Hospice Fraud in California.” Rational Ground by Justin Hart (blog), March 10, 2026. https://www.rationalground.com/p/breaking-big-hospice-fraud-in-california.
[24] Parker, Jim. “California Leads the State-Level Battle Against Hospice Fraud.” Hospice News, March 14, 2024. https://hospicenews.com/2024/03/13/californias-leads-the-state-level-battle-against-hospice-fraud/.
