A surge in fraudulent activity is plaguing the hospice system in Los Angeles County, with auditors and prosecutors reporting billions of dollars in taxpayer money being siphoned off through schemes involving “ghost patients,” sham companies, and corrupt medical professionals.
Widespread Fraud in Los Angeles Hospices
Dr. Mehmet Oz, head of the Centers for Medicare and Medicaid Services, described the situation as “crazy,” stating that hospice growth in the area has increased sevenfold in the last five years, representing approximately $3.5 billion in suspected fraud within LA County alone. California Attorney General Rob Bonta echoed these concerns, declaring hospice fraud an “epidemic” specifically in the greater Los Angeles area.
The fraud operates through a network of illicit practices. Recruiters are allegedly offering incentives – including walkers, nutritional drinks, cash, and promises of weekly visits – in exchange for Medicare numbers. These numbers are then sold to fraudulent providers for between $1,000 and $3,000, with recruiters receiving a cut for each month the beneficiary remains enrolled. Patients are often enrolled without their knowledge, discovering the fraud only when seeking legitimate medical care.
Exploitation and Lack of Oversight
A whistleblower revealed a significant loophole in the system: there is currently no limit to the number of hospices an individual can own, and applications can even be submitted from abroad. As one LA hospice owner stated, “I could fill [an application] out in Kazakhstan if I want, and get a hospice license.” This lack of oversight allows for widespread abuse and makes it difficult to track and prosecute offenders.
The scale of the problem is staggering. LA County has 1,923 hospice providers – more than the combined total of 36 other states, and 33 times more than Florida or New York, despite having a smaller senior population. Investigators have found instances of over 200 hospice agencies operating within a single square mile in Van Nuys, with some buildings housing over 100 licensed hospices despite showing no outward signs of operation.
Authorities believe organized crime, including “Russian, Armenian gangs, mafia,” are heavily involved, corrupting doctors and facilitating the fraudulent schemes. The Mirzoyan-Terdjanian crime ring, previously prosecuted for a $100 million Medicare fraud, exemplifies this connection, with numerous Armenian American hospice owners facing prosecution in California.
Consequences and Potential Next Steps
California has implemented a moratorium on new hospice licenses in an attempt to address the crisis. However, hundreds of fraudulent providers remain operational, hindering access to legitimate care for seniors who genuinely need it. Sheila Clark, president of the California Hospice and Palliative Care Association, warns that a Medicare Identification Number (MIB) is now “more lucrative than a credit card,” and describes the situation as “human trafficking” of beneficiaries.
If current trends continue, it is likely that federal and state investigations will intensify, potentially leading to further arrests and prosecutions. Increased scrutiny of existing hospice licenses and stricter regulations regarding ownership and operation could also be implemented. However, without significant systemic changes, the fraudulent activity may persist, continuing to drain taxpayer resources and compromise the quality of care for vulnerable seniors.
Frequently Asked Questions
What is the primary method used to defraud the hospice system?
Fraudulent providers are recruiting seniors, often with incentives, to obtain their Medicare numbers, which are then sold to hospice agencies for ongoing billing, regardless of whether the patients require or receive care.
Where is the epicenter of this hospice fraud?
The greater Los Angeles area, particularly the San Fernando Valley and the Van Nuys neighborhood, has been identified as the epicenter of this fraudulent activity.
What is being done to address the problem?
California has imposed a moratorium on new hospice licenses. Authorities are conducting investigations and prosecutions, and there is a growing call for stricter regulations and oversight of the hospice industry.
What further steps can be taken to protect seniors and ensure the integrity of the hospice system?
