$3.5 BILLION Stolen—Newsom Stayed Silent for YEARS

California Governor Gavin Newsom knew about a massive hospice fraud scheme for years while taxpayers lost billions, yet Congress is only now launching a full investigation into what federal officials call an “epidemic” of organized crime exploiting end-of-life care.

Story Snapshot

Federal oversight committee investigates California hospice fraud after Newsom allegedly aware of problem since 2020
Los Angeles County lost an estimated $3.5 billion to fraudulent hospice operations, with 89 firms operating from a single Van Nuys address
CMS revoked billing privileges for 60% of new California hospice providers and flagged 35% for corrective action
Political firestorm erupts as Newsom defends state actions while Republicans accuse him of enabling rampant fraud through weak oversight

Hospice Fraud Reaches Crisis Proportions in California

California’s hospice industry transformed into a fraud factory over the past six years, with Los Angeles County emerging as ground zero for organized criminal networks exploiting Medicare and Medi-Cal programs. CBS News investigations in 2022 documented nearly 500 hospice providers clustered within a three-mile radius, including 89 operating from one Van Nuys office building. These fraudulent operations recruited non-terminal patients into hospice care to bilk taxpayers, with schemes tied to Russian and Armenian criminal networks stealing over $16 million through fake identities and false billing. The scale of fraud represents a fundamental betrayal of vulnerable families and hardworking taxpayers funding these programs.

State Response Falls Short Despite Years of Warnings

Governor Newsom signed SB 664 in 2021 to ban new hospice licenses after the Los Angeles Times exposed widespread recruitment fraud in 2020. State Attorney General Rob Bonta’s Division of Medi-Cal Fraud and Elder Abuse investigated 101 criminal enterprises and filed charges against 109 individuals for hospice-related offenses. California revoked over 280 licenses and extended the moratorium through January 2027 via AB 177. Despite these actions, federal officials and Republican lawmakers argue the state’s response came too late and lacked sufficient enforcement. A 2022 state audit identified “numerous indicators” of large-scale fraud, yet the epidemic continued growing, raising serious questions about Sacramento’s commitment to protecting taxpayer dollars versus political calculations.

Federal Crackdown Exposes State Failures

CMS Administrator Mehmet Oz sent a pointed letter to Governor Newsom on January 27, 2026, demanding comprehensive data on Medi-Cal oversight and hospice fraud prevention. The Trump administration’s Centers for Medicare and Medicaid Services revoked billing privileges for 60 percent of newly enrolled California hospice providers and flagged 35 percent for corrective action. The House Energy and Commerce Committee held hearings in February 2026 examining Medicare and Medicaid fraud, with California’s hospice scandal taking center stage. White House officials flagged California for “insufficient safeguards” in March 2026, while Assemblywoman Macedo submitted a formal hospice investigation request to Congress. Newsom responded defensively, filing an Office for Civil Rights complaint accusing Oz of “racial animus” rather than addressing the substantive fraud concerns.

Taxpayers and Patients Bear the Cost

Federal estimates place Los Angeles County’s hospice fraud losses at $3.5 billion, with national hospice fraud exceeding $25 billion annually. Fraudulent operators enrolled non-terminal patients into hospice programs, denying them appropriate medical care while collecting taxpayer-funded reimbursements meant for genuine end-of-life compassion. Legitimate hospice providers face increased scrutiny and regulatory burdens due to widespread abuse, potentially limiting access for truly terminal patients. The fraud schemes exploited vulnerable elderly and immigrant communities, with organized crime networks using foreign identification documents to establish fake provider networks. This represents government failure at its most fundamental level—protecting citizens from predatory criminals while ensuring tax dollars serve their intended purpose rather than enriching fraud rings.

Political Battle Lines Harden Over Accountability

The hospice fraud scandal intensified partisan divisions as Newsom’s final gubernatorial year coincides with the Trump administration’s aggressive federal oversight push. Republican state lawmakers sent a letter in March 2026 accusing Newsom of tolerating “rampant fraud” despite years of documented evidence. Newsom’s press releases emphasized state prosecutions and license revocations, claiming California “didn’t wait” and “cracked down for years,” while deflecting federal criticism as politically motivated. Attorney General Bonta called the fraud an “epidemic” but insisted California remains “at the forefront” of combating the problem. The fundamental question remains: if state officials knew about this crisis since 2020, why did it take federal intervention and congressional oversight to force meaningful action? Taxpayers deserve answers, not political theater.