Federal authorities are investigating a sprawling Medicare fraud scheme involving fake hospices that has cost billions and endangered vulnerable seniors in California. In Los Angeles County alone, fraudulent hospice claims are estimated to total $3.5 billion.
Fraudsters allegedly create fictitious hospice organizations, steal identities, and enroll individuals, often seniors, in end-of-life care services to bill Medicare. A significant consequence for victims is that Medicare typically ceases to cover other medical treatments once a patient is enrolled in hospice, potentially delaying or denying necessary care.
Linda Henry, a 71-year-old retiree, discovered she was enrolled in hospice without her consent in 2024. Her Medicare records indicated she had heart failure, a diagnosis she did not have. The enrollment jeopardized her regular medical treatments, as claims for allergy tests and other procedures were denied. Henry spent months attempting to rectify the situation, providing documentation from her doctor confirming she was healthy.
She was allegedly enrolled with Fortuna Hospice Inc., a company that did not respond to her inquiries and whose listed address appeared to be an empty office. Henry told the Associated Press that she postponed medical appointments, including a colonoscopy, due to the billing disputes. It took eight months for Medicare to recognize her as a fraud victim, followed by an additional four months before she could resume seeing doctors.
California has become a focal point for federal efforts to combat this fraud. The state saw a decrease in hospice organizations, from 2,800 in 2022 to about 2,100 in 2026, according to AP data. A 2022 state audit highlighted numerous hospice agencies clustered in shared office spaces and other indicators of fraudulent activity.
First Assistant U.S. Attorney Bill Essayli described California as a "kingdom of fraud." In response to the escalating problem, California has revoked nearly 500 hospice licenses since implementing a moratorium on new hospices in 2021. Emergency regulations introduced in June have tightened requirements for obtaining new licenses. More than 1,000 California hospices have been removed from the Medicare system since early 2025.
Beyond financial losses to taxpayers, advocates warn that the fraud obstructs seniors from receiving appropriate medical care. Sheila Clark, CEO of the California Hospice and Palliative Care Association, testified about a woman who was falsely enrolled in hospice and subsequently denied approval for cataract surgery. She died two months later in a skilled nursing facility. Clark emphasized the need for coordinated state and federal efforts to address the issue.