CMS Administrator Dr. Mehmet Oz has accused California's leadership of enabling rampant Medicaid fraud, asserting that powerful labor unions are the primary beneficiaries. Oz claims these unions funnel significant campaign cash to politicians, creating little incentive for state officials to address the issue. The Trump administration has previously deferred approximately $867 million in California Medicaid payments due to fraud concerns.
Oz stated that the "cui bono"—who benefits—question points to unions associated with the In-Home Supportive Services (IHSS) program and the politicians they fund. "Some of the biggest beneficiaries seem to be the powerful unions that dominate California’s IHSS and the politicians whose campaigns they fund with tens of millions of dollars," Oz told The Post. He identified SEIU Local 2015 and United Domestic Workers (UDW) as major labor organizations in the state.
According to Oz, lax program integrity standards for Medicaid can lead to increased demand for caregivers, which in turn boosts union membership and dues. "These incentives create a vicious cycle: Lax program integrity standards mean more demand for caregivers, more caregivers mean more union dues, and more union dues mean more donations for the elected officials who are supposed to be guarding the cash register," he explained.
Oz also raised allegations of coercion within some of California's labor organizations, claiming that healthcare workers are sometimes forced to join unions rather than having a choice. "We believe California has not been doing that," he said, citing a labor complaint where a union representative allegedly prevented attendees from leaving an orientation until they signed a membership card.
The Department of Justice is reportedly investigating allegations of coercion, according to a senior law enforcement source. Other complaints mentioned include forged signatures and dues being collected before an agreement was finalized, as well as instances of caregivers being charged dues despite explicitly opting out. Oz indicated that while these First Amendment violations were not the direct cause for the federal deferral of Medicaid payments, they help explain an environment where state leadership has little incentive to question the flow of funds.
California Governor Gavin Newsom has denied allegations of widespread fraud, labeling them as "pure politics" and stating his administration collaborates with federal authorities. In July, the Trump administration targeted California's IHSS program, a Medicaid-funded initiative that supports individuals needing in-home care. Prior to this, in May, the administration withheld $1.3 billion in Medicaid funding over concerns related to hospice and home-health agencies, bringing the total withheld funding to over $2 billion. Oz noted that California's spending on in-home services was double the national average.
The Post reached out to SEIU Local 2015 and UDW for comment but had not received a response at the time of publication.