Ghost Hospices Steal Billions

California’s Democrat-led government allowed ghost hospice clinics to steal $3.5 billion from Medicare, leaving vulnerable seniors without real care while taxpayers foot the bill.

Story Highlights

CBS News exposes 742 fraudulent hospices still operating in LA County despite state crackdowns, with 700 out of 1,800 showing red flags.
Fraud epicenter in Van Nuys: 210 agencies in one square mile, 500 within three miles, 89 in a single building—$3.5 billion stolen locally.
Seniors suffer: Fraudulent providers “own” Medicare numbers, blocking legitimate care; international crime rings exploit lax oversight.
Newsom’s administration revoked 280 licenses over four years but failed to stop hundreds more, highlighting big government inefficiency.
Dr. Mehmet Oz calls it “crazy”—18% of national home health billing from LA County amid seven-fold industry growth.

Fraud Scale in Los Angeles County

CBS News investigated every licensed hospice in LA County, over 1,700 facilities, and found approximately 700 displaying red flags for fraud per state standards. Reporters visited sites revealing empty offices, piled-up mail, and non-functional phone lines. These ghost operations bill Medicare for non-existent patients using shell companies and stolen numbers. The geographic clustering stands out: 500 hospices within three miles, 89 in one building, and 210 agencies packed into a single square mile in Van Nuys, the fraud epicenter. This concentration enables criminal networks to thrive unchecked.

Historical Roots and Organized Crime Ties

Hospice fraud took root around 2016 when federal prosecutors charged 73 members of the Armenian-American Mirzoyan-Terdjanian crime ring with stealing $100 million from Medicare via phantom clinics. The scheme involved racketeering, health care fraud, and money laundering, with sentences of one to three years. Los Angeles hospice services exploded seven-fold in five years, creating perfect cover for scammers. International organized crime exploited rapid growth and regulatory gaps, turning end-of-life care into a billion-dollar racket that preys on America’s seniors.

State Response Falls Short

Governor Newsom’s 2022 hospice provider ban led to over 280 license revocations in four years. Attorney General Rob Bonta’s office investigated 101 criminal enterprises, charged 109 individuals, and filed 24 civil cases since taking office. California extended its new-license moratorium through 2027 and formed a Hospice Fraud Task Force. Yet CBS documented 742 suspect companies still licensed and billing. Bonta admitted enforcement reacts “after the damage is done,” counting red flags without swift action. This reactive bureaucracy wastes taxpayer dollars on endless probes instead of prevention.

Federal Oversight and Victim Impact

CMS Director Dr. Mehmet Oz labeled LA’s fraud “crazy,” noting $3.5 billion lost locally—18% of national home health billing from one county. Nationwide, suspected Medicare hospice fraud hit $200 million in 2023 per HHS Inspector General. Seniors pay the heaviest price: Fraudulent hospices “own” their Medicare numbers, barring real doctors and hospitals from providing care. Vulnerable elderly face exploitation, denied legitimate palliative services amid distorted resource allocation. Taxpayers bear billions in losses, eroding trust in bloated government healthcare programs.

Jurisdictional Gaps Enable Persistence

Federal-state divides exacerbate the crisis: CMS handles Medicare payments while California controls licensing, creating enforcement voids. Fraudsters operate licensed ghosts despite federal red flags. Newsom’s office touts partnerships and arrests, but hundreds persist. Bonta calls fraud an “epidemic” in greater LA, urging response to warnings rather than tallies. Under President Trump’s CMS leadership via Oz, federal intervention may finally address this waste, protecting seniors from Democrat mismanagement and restoring fiscal sanity to Medicare.

Path Forward for Accountability

The CBS probe, aired March 10 on CBS Mornings, pressures California for real reforms like proactive license suspensions and better federal-state coordination. Legitimate providers suffer reputational harm and competition from low-overhead crooks. This scandal underscores big government’s failure to safeguard taxpayer funds and protect families. With Trump in the White House, expect CMS crackdowns to drain the swamp of healthcare fraud, prioritizing American seniors over criminal enterprises.