Los Angeles hospice fraud reaches billions as Medicare providers scam federal system with fake companies

Reports from auditors and prosecutors indicate that hospice fraud has reached alarming levels in Los Angeles, with schemes involving fabricated patients, bogus companies, hidden ownership, and corrupt healthcare professionals. These fraudulent activities are siphoning billions from taxpayers, often involving nonexistent patients and inadequate or nonexistent care.

Dr. Mehmet Oz, who heads the Centers for Medicare and Medicaid Services, described the situation as dire. “The hospice sector here is out of control,” he stated. “In the past five years, the industry has expanded seven-fold, and we estimate that around $3.5 billion in fraud is linked to LA County alone.”

California Attorney General Rob Bonta echoed these concerns, labeling hospice fraud as an epidemic in the state, particularly in the Los Angeles area. According to Bonta, fraudulent operators are filing false claims for unneeded services, and recruiters are receiving illicit payments for enrolling seniors, irrespective of their health status. In many cases, individuals are unknowingly signed up for hospice care and only discover the deception when they attempt to access medical services.

Reflecting on the ease of abuse within the system, a hospice owner in Los Angeles candidly remarked, “As a hospice owner, I could sign up everybody in this room for hospice.”

Bonta says fraudulent providers submit false claims for unnecessary services, and recruiters get kickbacks for signing up seniors, whether they’re sick or not. Hospices also enroll patients who don’t even know they’ve been scammed until they seek out medical care.

“As a hospice owner, I could sign up everybody in this room for hospice,” an LA hospice owner told us. 

A whistleblower told us there’s no limit on the number of hospices an individual can own, and applicants can live abroad. 

“It’s all just paperwork. I could fill [an application] out in Kazakhstan if I want, and get a hospice license.”

Dr. Mehmet Oz

Dr. Mehmet Oz speaks during a confirmation hearing with the Senate Finance Committee in the Dirksen Senate Office Building on March 14, 2025 in Washington, D.C. (Anna Moneymaker/Getty Images)

He explained how the scam works:

  • Recruiters go to shopping centers and senior centers to sign up patients, promising them walkers, a month’s supply of nutritional drinks, cash and weekly visits in exchange for a Medicare number.
  • Recruiters then sell that “benny” or beneficiary’s Medicare number to a provider for a $1,000 to $3,000 and receive a cut for every month the senior stays on their rolls.
  • Hospice enrollees are supposed to have a terminal illness or life expectancy of six months or less. But frequently hospice owners treat patients like trading cards, moving them from one provider to another if they stay too long, which raises a red flag with auditors.
  • In the U.S., more than 50% of hospice patients die within 18 days or less. In LA, the average length of stay is more than three months, and, in many hospices, patients never die, with court records showing hospices billing the federal government for 18 months and more.
  • In LA, a hospice is paid by the federal government $260 a day for each day a senior is under its care.
  • Hospices can fraudulently obtain more money by “upcoding” and “unbundling” procedures to inflate invoices.

“A Medicare MIB number is more lucrative than a credit card,” says Sheila Clark, president of the California Hospice and Palliative Care Association, referring to the 11 character code each Medicare recipient has that allows federal reimbursement. “They’re human traffickers. They’re trafficking beneficiaries in and out of hospices, home health.”

LA County alone has 1,923 hospice providers. That’s more than 36 states combined and 33 times more than either Florida’s 58 cents or New York’s 40, even though LA has hundreds of thousands of fewer seniors.

Rob Bonta speaking in front of American flag

California Attorney General Rob Bonta announces the state is suing the White House to restore SNAP funding before the cutoff during a news conference in Sacramento, Calif., Oct. 28, 2025. (Reuters/Fred Greaves/File Photo)

“Eighteen percent of the whole country’s home health care billing is coming out of Los Angeles County,” says Oz. “How is that possible?”

The epicenter of LA’s fraud happens in the San Fernando Valley, specifically the Van Nuys neighborhood where state auditors found 210 hospice agencies within a square mile. One commercial building — without any signage indicating hospice services were located inside — received state licenses for 112 hospices. Fox News went to those addresses and did not see a single person. 

At other locations in the valley, hospices operated inside strip malls alongside burrito stands, nail salons, dance studios, tax preparers and even an auto parts store and wrecking yard.

“These are Russian, Armenian gangs, mafia that are leading a lot of these efforts, we believe, have been able to corrupt, and work with doctors who are willing to lie,” says Oz.

Elderly woman nursing home

A Hospice Nurse visits an Eederly male patient who is receiving hospice/palliative care. (iStock)

Oz was referring to the dozens of defendants of Armenian American descent prosecuted for Medicare fraud at both the federal and state level.

Investigators first uncovered the international organized crime connection about 10 years ago when federal prosecutors charged 73 members and associates throughout the U.S. and Armenia of stealing $100 million from Medicare by using a series of phantom clinics to bill for thousands of unnecessary medical treatments. 

Known as the Mirzoyan-Terdjanian crime ring, defendants received one- to three-year sentences for racketeering, health care fraud and money laundering. Since then, many other Armenian American hospice owners have been prosecuted in California.

California imposed a moratorium on new hospice licenses until it can clean up the industry. Problem is, hundreds of fraudulent providers remain in business, says Clark. And when seniors actually need care, they can’t get it because the hospice “owns” their Medicare numbers, prohibiting legitimate doctors and hospitals from providing care.

“They call the hospice, there’s no working phone number. There’s nobody there. I’ve had Benny’s bang on the door. There is nobody there. What do they do? They say, ‘I didn’t enroll in this hospice.’ They need the care but can’t get it,” says Clark. 

“We need to listen to these people when they say, ‘I’ve been scammed.’”

You May Also Like
Feds seize $40M in gold bars, cash, Rolexes from former CIA official who faked being a Navy pilot

Ex-CIA Officer Impersonating Navy Pilot Busted with $40M in Gold, Cash, and Rolexes

A former top-level U.S. government official, who once held a high-security clearance,…
Matthew Perry's assistant Kenneth Iwamasa sentenced to 3 years and 5 months for actor's ketamine death

Matthew Perry’s Assistant Kenneth Iwamasa Sentenced Over Involvement in Actor’s Ketamine Tragedy

The personal assistant of actor Matthew Perry, Kenneth Iwamasa, has been handed…
Florida's New Congressional Map One Step Closer to Reality After Circuit Court Judge's Ruling

Florida’s Path to a New Congressional Map Advances with Circuit Court Approval

In late April, Florida took a significant step by redrawing its congressional…
Utah toddlers kidnapped by broke dad found 800 miles away in Mexico after mom's desperate plea

Miraculous Rescue: Utah Toddlers Found 800 Miles Away in Mexico After Mom’s Heartfelt Plea

Authorities have successfully located two young brothers who were allegedly abducted by…
Chicago's Goodman Theatre celebrating centennial: 100 years of stage excellence and innovation

Celebrate a Century of Stage Brilliance: Goodman Theatre’s 100 Years of Innovation in Chicago

The renowned Goodman Theatre in Chicago is marking its 100th anniversary, celebrating…
Judge Yashiba Blanchard allegedly postponed hearings to walk dogs

Judge Yashiba Blanchard Accused of Delaying Court Sessions for Dog Walks

A judge in Alabama has been suspended following accusations of making racially…
LA's home market hits fresh insanity

Exploring the Unprecedented Surge: LA’s Housing Market Reaches New Heights

In a striking example of California’s unpredictable real estate market, a charred…
Minneapolis police chief resigns after interfering with investigation, mayor says

Shocking Resignation: Minneapolis Police Chief Steps Down Amid Investigation Interference Allegations

Minneapolis Police Chief Brian O’Hara has stepped down following revelations of his…
American couple's Bahamas dinghy was ill-equipped for conditions night of wife's disappearance: friend

Federal Authorities to Renew Search for Lynette Hooker in Bahamas After GPS Data Challenges Husband’s Account: Report

Federal investigators have renewed their efforts to locate a Michigan woman who…
Anna 'Delvey' Sorokin still posting from New York City as DHS signals her deportation may finally be coming

Anna ‘Delvey’ Sorokin Continues NYC Presence Amidst Potential Deportation Notice from DHS

Anna “Delvey” Sorokin, a German-Russian native who infamously masqueraded as a wealthy…
Long Island fireworks show in honor of fallen soldiers canceled after green activists threaten protest

Long Island Fireworks Tribute to Fallen Soldiers Canceled Amid Environmental Concerns and Activist Protests

A planned fireworks tribute to honor fallen soldiers on a Long Island…
2026 World Cup U.S. Men's National Team roster is announced. See who made the list.

Breaking: Discover the 2026 World Cup U.S. Men’s National Team Roster – See Who’s In!

The official lineup for the 2026 U.S. World Cup team was unveiled…