LOS ANGELES— Dr. Mehmet Oz, Administrator for the Centers for Medicare and Medicaid Services (CMS), announced Wednesday that federal investigators have identified a massive hospice fraud network in Los Angeles totaling an estimated $3.5 billion. During a high-profile press conference, Oz described a "four-block area" in the city containing 42 different hospice providers, a density he claimed indicates widespread criminal activity. Federal authorities allege that the scheme is largely orchestrated by the Russian-Armenian mafia, which has reportedly exploited the healthcare system through identity theft, kickbacks to doctors, and billing for patients who are not terminally ill.
The federal crackdown has sparked a fierce political battle with California Governor Gavin Newsom. In a sharp rebuttal, Newsom’s office accused the Trump administration of attempting to take credit for an effort the state launched years ago. The Governor highlighted that since 2021, California has revoked more than 280 hospice licenses and maintained a strict moratorium on new providers. Newsom labeled the federal intervention as "cosplay," arguing that the White House has actually dismantled federal oversight while ignoring fraud allegations in Republican-led states like Florida and Texas.
Despite the state’s defense, federal prosecutors and CMS officials maintain that the scope of the problem is much larger than previously reported. U.S. Attorney Bill Essayli warned that the Los Angeles investigation could uncover up to $19 billion in fraudulent claims, potentially dwarfing a similar $9 billion scandal recently uncovered in Minnesota. Federal agents are currently scrutinizing providers with "low or nonexistent death rates," suggesting that thousands of Medicare beneficiaries may have been enrolled in hospice care without their knowledge. As the investigation widens, the case has become a central flashpoint in the ongoing friction between California and the federal government over fiscal accountability and organized crime.
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