California Arrests Five in Hospice Fraud Scheme
Authorities in California announced on Thursday the arrest of five individuals connected to a multimillion-dollar hospice fraud operation.
California Attorney General Rob Bonta informed the public that this scheme defrauded the state of over $267 million by submitting fraudulent claims to Medi-Cal, California’s Medicaid program. In total, 21 people have been indicted in connection with this case.
The arrests were part of a broader state investigation labeled “Operation Skip Trace,” which focused on various locations in Southern California.
Bonta stated during a press conference that this situation was not simply the result of billing mistakes or unintentional errors. “This was a calculated criminal plot aimed at abusing the Medi-Cal system, stealing from both the state and Medicaid, ultimately denying essential services to individuals in need,” he remarked.
The investigation was triggered by a tip from the state Department of Health Services regarding potential hospice fraud involving 14 companies. Bonta’s office pursued inquiries into these companies and identified eight individuals for possible money laundering activities.
Investigators uncovered that the accused were acquiring personal identifying information from people residing outside California, using the dark web, and were fraudulently registering them as California residents.
The so-called “straw owners” then purchased multiple hospice companies and attempted to bill Medi-Cal for services that were never provided to these stolen identities. According to Bonta, they relied on fake documents, ghost offices, and bogus diagnoses to support their claims.
“The individuals posing as patients were in fact healthy, lived out of state, and were completely unaware of their enrollment in hospice care,” he added.
California’s Health and Human Services Secretary, Kim Johnson, stated that the Department of Health Care Services (DHCS) has halted payments and terminated all fraudulent hospice providers. She also indicated that a moratorium on newly licensed providers will be in effect until January 2027.
Bonta explained that once payments were processed, the money was funneled through an intricate network of over 130 shell companies and concealed within various bank accounts, payment apps, and cryptocurrencies to evade detection. “Money laundering was definitely involved,” he confirmed.
No actual medical services were rendered, as pointed out by Bonta. He mentioned that all 21 suspects are facing scrutiny through arrests, active warrants, or summons for court appearances. In conjunction with these fraud allegations, he expressed discontent with the Trump administration for allegedly politicizing the issue and targeting California.
Recently, California has faced increased scrutiny over fraud concerns and has been engaged with a federal task force led by J.D. Vance. Just last week, eight individuals were arrested in another federal investigation related to a $60 million Medicare fraud scheme.
