Investigating Hospice Fraud in Los Angeles
Ghost patients, fraudulent companies, and corrupt doctors—these are just a few aspects of the alarming hospice fraud situation in Los Angeles. Auditors and prosecutors have highlighted how healthcare providers are swindling taxpayers out of billions for patients who either don’t exist or are poorly cared for.
“Hospice is out of control here,” remarked Dr. Mehmet Oz, who heads the Centers for Medicare and Medicaid Services. “We’ve seen hospices multiply by seven times in just five years. It’s estimated that Los Angeles County alone is facing around $3.5 billion in fraud.”
California Attorney General Rob Bonta echoed his sentiments, emphasizing last year that “hospice fraud is widespread in California, particularly in the greater Los Angeles area.” He mentioned that dishonest providers file false claims for unwarranted services, and those who recruit seniors often receive kickbacks for signing them up, regardless of their health status. Disturbingly, many patients don’t realize they’ve been caught in a scam until they actually seek medical attention.
“As a hospice owner, you could enroll everyone around you,” one LA hospice owner said, revealing the lack of restrictions on how many hospices anyone can own, even if they live in another country. “It’s just a matter of paperwork. You could even go to Kazakhstan for a hospice license if you wanted to.”
Here’s how the fraud plays out:
- Recruiters target shopping and senior centers, promising patients items like walkers or cash in exchange for their Medicare numbers.
- They then sell those Medicare numbers to providers for $1,000 to $3,000 and earn a share for each month the senior remains enrolled.
- Hospice patients are supposed to be terminally ill but are often treated like commodities, with management transferring them between providers if they linger too long, raising suspicions.
- About 50% of hospice patients in the U.S. die within 18 days, while in LA, the average stay exceeds three months—some hospices bill for patients who haven’t died in over 18 months.
- The federal government pays hospices $260 daily for each elderly patient in care. However, fraudulent billing practices can inflate these charges significantly.
Sheila Clark, president of the California Hospice and Palliative Care Association, called attention to the lucrative nature of Medicare MIB numbers, indicating that they’re more profitable than credit cards. “These are human traffickers, moving patients in and out of hospice care,” she stated.
Los Angeles County has a staggering number of hospice providers—1,923—which surpasses the total in 36 states combined. This figure is over 33 times higher than the number of licensed facilities in Florida and New York, despite LA having significantly fewer seniors.
Dr. Oz raised a question regarding the high volume of health claims originating from LA, pointing out that 18% of home health claims in the U.S. come from this county. “How could that be?” he wondered.
The San Fernando Valley appears to be a hotspot for these fraudulent activities, particularly in the Van Nuys area. State auditors discovered 210 hospice agencies in a single square mile. One commercial building alone had a state license for 112 hospice facilities, yet there were no visible signs of hospice operations. A visit to these locations revealed no staff or services available.
Interestingly, many of these hospice operations are situated in strip malls, alongside local businesses like burrito stands and nail salons. Dr. Oz has suggested that some of these schemes may be linked to organized crime, including Russian and Armenian gangs, colluding with corrupt medical professionals.
About a decade ago, ties to organized crime were first identified when federal prosecutors charged numerous individuals linked to a group accused of stealing $100 million from Medicare through fake clinics. These individuals received prison sentences for their roles in extortion and medical fraud. More recently, multiple hospice operators from the Armenian-American community have faced indictments in California.
Currently, California has a moratorium on new hospice licenses as efforts are made to rectify the situation. However, Clark warns that many fraudulent providers still operate, denying genuine care to seniors. These patients often discover they cannot get treatment when they need it because the hospice claims control over their Medicare numbers, effectively shutting them out from regular medical care.
Clark expressed frustration at the difficulty seniors face when attempting to reach their hospice services. “They go to call, but there’s no number, or they knock on doors, and the response is silence. It’s heartbreaking, especially when they genuinely need help,” she remarked.
