California arrested five people in connection with health care and hospice fraud last week, amid mounting allegations that the state’s medical aid programs are plagued by fraudulent behavior.
California’s Department of Justice, in collaboration with the state’s Department of Health Care Services, found that transnational criminal networks used stolen identities to enroll individuals in Medi-Cal, the state’s Medicaid program.
Fraudsters then billed the program, which is jointly funded by the federal government, for hospice services that were never provided.
The fraud included 14 hospice providers, which collectively billed California more than $267 million.
Hospice door-knocking commences
On March 16, independent journalist Nick Shirley posted a 40-minute video on X, knocking on doors of registered hospices in Southern California.
The video garnered 42.8 million views, and three days later, CBS News followed up with a similar investigation.
The station’s Shirley-styled video followed its investigation published March 10, which built off the state’s 2023 audit. The auditor had found a 1,500% increase in hospice companies since 2010.
Accompanied by Sheila Clark, a local hospice patient advocate, CBS reporter Adam Yamaguchi entered a building in Los Angeles with 89 licensed hospices to see if he could find any fraudulent behavior.
“In this particular building, I noticed ... how can there be that many licensed and certified hospices in this tiny little building?” Clark told Yamaguchi.
Reports of fraud explode across California’s medical programs
An investigation for City Journal, led by Christopher Rufo and Kenneth Schrupp, reported that California’s In-Home Supportive Services Program costs the state $6 billion to $12 billion a year in fraud.
Meanwhile, California’s home-healthcare unions collect more than $149 million in membership dues, much of which is reportedly spent on political donations.
Rufo told Fox News on Saturday, “The program is losing between 20%-40% of its entire budget to fraud.”
“It’s not just California taxpayers ... this is a federally subsidized program. If you’re going to work every day, if you’re paying your quarterly taxes, you should know that part of your taxes are going to fraudsters who are falsifying timesheets, who are pretending to take care of people, who may or may not be actually in need, and Gavin Newsom has done nothing except funnel more cash into the system,” he said.
Fraud in the state’s in-home service program is nothing new. In 2009, the state estimated that 25% of IHSS claims were fraudulent.
Signing up for the state program is simple. Anyone disabled, blind or over 65 years old can file a prospective beneficiary application with the California Department of Social Services. Then a county social worker visits the applicant’s home, and if approved, the beneficiary can hire any caregiver of his choice to pay with tax money.
In more than 70% of cases, applicants hire a family member, which advocates say is a way for families to care for their loved ones.
But, it can also give way to fraud. “IHSS provider” has become the largest low-wage occupation in California, beating out fast-food workers, cashiers, retail and waiters.
Newsom says California is ‘leading the charge’ against fraud
Newsom is defending the state’s response to reports of fraud, posting to X: “California is again leading the charge against large-scale identity theft and hospice fraud.”
He continued, “Today, we’re taking decisive action against 14 providers who tried using stolen identities to bill Medi-Cal for nonexistent hospice services.”
The post racked up 7.3 million views.
Before the post, Newsom had maintained that a law from 2021, which focused on hospice fraud, sufficiently curbed the program’s abuse in the state.
But Republicans in the state argue that the law, while it imposed a two-year licensing freeze on new hospices, didn’t provide strong enough enforcement or oversight systems.
Since 2021, California has revoked at least 280 hospice licenses, Newsom said. However, in Los Angeles alone, CBS reported that more than 700 of the active 1,800 hospices triggered multiple red flags for fraud.