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 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.

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.

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.’”