LOS ANGELES (Diya TV) — California authorities have charged 21 suspects in a massive $267 million hospice fraud scheme that allegedly targeted the state’s Medi-Cal program, according to officials. The case, first reported by CBS News, highlights growing concerns about health care fraud and misuse of taxpayer funds.
The California Department of Justice announced arrests this week as part of an ongoing investigation into what officials described as a sophisticated criminal operation. Authorities arrested five people on Wednesday, while others received notices to appear in court. Officials warned that those who fail to appear will face arrest warrants. California Attorney General Rob Bonta said the suspects orchestrated a scheme that billed Medi-Cal for hospice services that were never provided.
“This was not a mistake or oversight,” Bonta told CBS News. “This was intentional fraud.”
Investigators say the suspects used stolen identities to enroll fake patients in Medi-Cal, California’s Medicaid program. They allegedly bought personal information from the dark web, often belonging to people who did not live in California. Using these identities, the group reportedly set up a network of hospice companies. Straw owners purchased at least 14 licensed hospice businesses. The companies then submitted false claims for end-of-life care services.
“There were no real patients, no actual services, and no legitimate records,” Bonta said. “It was all fabricated.”
Authorities emphasized that all the hospice companies involved were legally licensed by the California Health and Human Services Agency, which allowed them to bill Medi-Cal.
Law enforcement agencies carried out raids at 10 locations across Southern California under an operation known as “Operation Skip Trace.” Officers seized evidence from homes and offices linked to the alleged fraud network.
The charges include health care fraud, conspiracy, identity theft, and money laundering. Prosecutors also added enhanced penalties for aggravated white-collar crime and large-scale financial misconduct. Officials said more arrests are likely as the investigation continues.
The case is part of a wider probe into hospice fraud in California. The California Department of Health Care Services first flagged suspicious activity. Tyler Sadwith, a senior official with the agency, said the state is now reviewing more than 300 hospice providers for possible license revocation.
“Taxpayers deserve accountability,” Sadwith said. “We must ensure this program serves the people who truly need care.”
A CBS News analysis found that more than 700 of roughly 1,800 hospice providers in Los Angeles County show multiple warning signs of potential fraud.
The issue extends beyond state investigations. On April 2, the U.S. Department of Justice announced federal charges against eight individuals in a separate hospice fraud case. Prosecutors said that the scheme involved more than $50 million in false claims. Acting U.S. Attorney Bill Essayli said the defendants included medical professionals such as nurses and a psychologist. These cases highlight systemic weaknesses in oversight of health care programs like Medicare and Medicaid.
Health care fraud has become a key political issue nationwide. Some federal officials have pointed to California as a major hotspot for abuse. Dr. Mehmet Oz, who leads the Centers for Medicare & Medicaid Services, said most states do not face the same level of fraud seen in Los Angeles County. California Gov. Gavin Newsom pushed back, saying the state has led efforts to combat fraud and protect public programs.
“We will hold anyone accountable who tries to exploit vulnerable patients or steal taxpayer money,” Newsom said in a statement.
State officials said they are working closely with federal partners to strengthen oversight and prevent future fraud. They plan to introduce stricter safeguards, improve monitoring systems, and increase enforcement actions. Bonta stressed that fraud affects every state and crosses political lines.
“This is not just California’s problem,” he said. “It is a national issue that requires strong enforcement and constant vigilance.”
