by Los Angeles, CA – Federal officials announced Friday that billions of dollars in alleged fraudulent healthcare spending in California is under investigation, focusing on illegal hospice operations run by foreign nationals. Authorities claim the scheme involves patients being falsely enrolled in hospice care to drain Medicare funds, raising serious concerns over taxpayer protections and oversight.
Investigators say the alleged fraud disproportionately impacts Los Angeles County, where officials report an unexplained sevenfold increase in hospice facilities in recent years.
Alleged Hospice Fraud Scheme
Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, stated during a press briefing that the surge in hospice operations cannot be explained by population or mortality trends.
“There is not seven times more deaths in LA County than there were five years ago. These are fraudsters, and these do tend to be foreign influences, either Russian and Armenian gangs, mafia, that are leading a lot of these efforts.”
According to Dr. Oz, roughly 100 doctors are involved in convincing patients they are terminally ill to enroll them in hospice programs, with approximately 100,000 people reportedly surrendering their Medicare numbers as part of the alleged scheme.
U.S. Attorney Bill Essayli emphasized the scope of the investigation, warning that California’s alleged healthcare fraud may dwarf similar cases in Minnesota.
“What’s happening in Minnesota pales in comparison to the level of fraud that we believe is occurring in California,” Essayli said.
Federal Funding Misuse Claims
Dr. Oz also alleged that federal dollars have been improperly used to fund elective medical procedures for undocumented immigrants, estimating $1.3 billion in federal funds have already been identified. Officials say the state is returning these funds. Essayli added that hundreds of billions flow through California’s healthcare system annually, with an estimated $10 billion allocated for undocumented immigrant healthcare, which is prohibited under federal law.
“No federal dollars is supposed to be used for that,” Essayli said.
California Leadership Pushback
California Governor Gavin Newsom disputed the federal fraud claims, noting that his administration has blocked over $125 billion in fraudulent claims and arrested individuals exploiting taxpayer funds. Newsom’s office emphasized that steps taken at the federal level are politically motivated and inconsistent with state protections.
Attorney General Rob Bonta, along with counterparts from Colorado, Illinois, Minnesota, and New York, filed a lawsuit challenging the Trump administration’s freeze of $10 billion in social services and childcare funding, calling the action “unconstitutional and unlawful.”
“With each passing day, his ‘America First’ rhetoric is exposed as nothing more than smoke and mirrors,” Bonta said.
Federal Response and Corrective Measures
Dr. Oz stated he intends to work with California officials to develop a corrective action plan but warned that federal authorities may take additional aggressive steps if cooperation is insufficient.
“They are aggressive steps, but this kind of a crisis requires aggressive treatment,” Dr. Oz said.
The Trump administration has also announced plans to appoint a new attorney general to specifically target healthcare fraud nationwide.
Context and Broader Implications
The probe comes amid broader scrutiny of public funds and immigration-related spending in the United States. The case highlights tensions between state and federal authorities over control of healthcare and social services funding, as well as the challenges of monitoring large, decentralized systems susceptible to fraudulent activity.
Investigators continue to gather evidence, and officials caution that further announcements are expected as the inquiry develops.
Conclusion
Federal authorities’ investigation into California hospice operations has exposed potentially billions of dollars in fraudulent Medicare spending, involving both criminal actors and unscrupulous medical providers. The dispute between state and federal leaders adds political complexity to a case with significant implications for taxpayer protection and healthcare oversight.
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