California’s hospice fraud scandal drained $105 million from Medicare in Los Angeles County alone under Gavin Newsom’s watch, exposing massive government waste that hardworking American taxpayers footed the bill for.
Fraud Scale and Sham Operations
State auditors identified $105 million in Medicare overbilling by hospice agencies in Los Angeles County during 2019. Federal investigators reported $198 million in suspected hospice fraud nationwide. Sham providers billed for medically unnecessary services never delivered. One address housed 112 different hospices, signaling organized criminal enterprises. These schemes exploited Medicare’s federal oversight gaps, defrauding vulnerable seniors and draining taxpayer funds from a program with $25 billion annual hospice spending.
Federal Prosecutions Deliver Justice
Federal prosecutors secured prison sentences for five key defendants in a scheme running from July 2019 to January 2023. Petros Fichidzhyan received 12 years and $17.1 million restitution. Karpis Srapyan, Juan Carlos Esparza, Mihran Panosyan, and Susanna Harutyunyan got terms from 15 to 57 months, with restitution totaling over $12 million. The government seized $2.92 million from linked bank accounts. Schemes involved identity theft, money laundering, and foreign nationals as straw owners.
Acting Assistant Attorney General Matthew R. Galeotti stressed the Justice Department’s resolve against healthcare fraudsters. These convictions recovered assets but underscore persistent vulnerabilities in Medicare administration.
Newsom’s Enforcement Falls Short
Governor Newsom imposed a 2021 moratorium on new hospice programs and reported revoking over 280 licenses in four years. The California Department of Justice investigated 101 criminal enterprises, charged 109 individuals, and filed 24 civil cases. Yet CBS News found many hospices with red flags remain active four years after promises to eradicate fraud. Newsom blamed federal jurisdiction, as Medicare falls under CMS, not state control.
Rep. Jason Smith (R-MO) warned Newsom’s California mirrors fraud-plagued states, with $1.2 billion improper payments undermining senior care. Trump administration actions froze $10 billion in child care funds for five Democrat states over similar issues.
Federal-State Tensions and Taxpayer Impact
CMS monitors California alongside Arizona, Nevada, Texas, Ohio, and Georgia for fraud. Newsom filed a civil rights complaint against federal “racist allegations” targeting Armenian Americans. House Republicans demand stronger HHS-OIG oversight. Taxpayers bear direct losses from overbilling while beneficiaries risk subpar care. Legitimate providers face scrutiny, eroding trust in hospice services critical for America’s seniors.
President Trump’s federal team prioritizes program integrity, contrasting Democrat mismanagement. Limited data on total fraud scale persists, but verified figures demand accountability to protect conservative values of fiscal responsibility and limited government waste.
Sources:
U.S. Department of Justice Press Release
House Energy and Commerce Committee