As Americans focus on the ongoing developments of a large-scale healthcare fraud case in Minnesota, the hospice care industry in Los Angeles County, Southern California, has also become a point of investigation by the US Department of Health. The Office of the Governor of California issued a statement on Wednesday (28th), rebutting the criticisms from federal agencies, stating that California had begun to combat healthcare fraud several years ago.
Under the Department of Health, Dr. Mehmet Oz, Director of the Centers for Medicare and Medicaid Services (CMS), recently visited areas in Los Angeles County where hospice care facilities are concentrated. According to a video he posted on X on Tuesday (27th), there are 42 such facilities within just four blocks in the Van Nuys area. He questioned how many patients are actually receiving services, stating, “Either there are a large number of terminally ill patients here, or there is some sort of fraudulent activity enticing people to participate.”
Previously, Oz revealed at a press conference that the number of hospice care facilities in the Los Angeles area has increased sevenfold compared to five years ago, with fraudulent amounts reaching up to $3.5 billion. Many of these facilities are controlled by the Russian-Armenian mafia. He warned people to be alert to foreign languages on signs and pointed out that in such fraudulent cases, criminals systematically bribe doctors to issue fake prescriptions, highlighting the operational model of organized crime groups.
Over the past two years, the Los Angeles area has seen a series of healthcare fraud cases, with several individuals convicted. In a major case tried last year, five ringleaders laundered nearly $16 million through operating hospice facilities, defrauding the Medicare program. Oz mentioned that these facilities were essentially vacant, offering no services, “They just established an address, falsely claimed to provide hospice care and home care, and pretended that there were people at home receiving services — when in reality, no one was there.”
Also last year, Nita A. P. Palma, a 75-year-old who operated a hospice care hospital in Glendale, was sentenced to 9 years in prison and ordered to pay over $8.27 million in restitution for illegal kickbacks and healthcare fraud, submitting over $10 million in false medical bills. Palma falsely claimed that patients were receiving hospice care when they weren’t deceased; for every patient used, she illegally profited $6,000 per month from Medicare.
In response to Oz’s investigation, the California Governor’s News Office issued a statement on Wednesday refuting Oz’s claim that Los Angeles County had become the “epicenter of healthcare fraud in America.” The statement mentioned that cases involving Medicare hospice care fraud fell within federal jurisdiction overseen by CMS. To prevent Medicare from being impacted by fraudulent activities, Governor Newsom signed a bill in 2021 prohibiting the issuance of new hospice care facility licenses and enhancing supervision. Another new law signed by Newsom in 2024 extended this prohibition until January 1, 2027.
The statement further indicated that in the past two years, the California Department of Public Health (CDPH) revoked licenses of over 280 hospice care facilities and conducted assessments leading to the revocation of additional 300 facilities.
CDPH is in the process of developing emergency regulations to strengthen anti-fraud oversight of hospice care facilities, including setting new educational and experience requirements for personnel in charge, establishing ratios of nurses to patients, and implementing other regulations.
Additionally, CDPH is coordinating efforts with the Departments of Health Care Services, Social Services, and the Medical Fraud Investigation Bureau under the Justice Department to form a hospice care anti-fraud task force, allowing for information sharing among agencies to take necessary actions.
In response to California’s statement, Oz stated on X on Wednesday: “If there were legitimate reasons to defend California against fraud allegations, we would have already heard them. CMS and law enforcement agencies will continue to fulfill their duties—tracking down fraudsters, nothing more.”