California AG Charges 21 in $267 Million Hospice Fraud Scheme Targeting Medi-Cal

Not a single legitimate hospice service was ever delivered. That is the allegation at the center of a $267 million fraud scheme dismantled by California law enforcement Wednesday, in what officials described as one of the largest Medi-Cal hospice takedowns in the state's recent history.

California Attorney General Rob Bonta, together with the California Department of Health Care Services, announced charges filed against 21 suspects and the dismantling of a major hospice fraud scheme on April 9. The multiagency probe, called Operation Skip Trace, resulted in the arrest of five people after ten different locations were searched in Southern California. In addition, two handguns and over $757,000 in cash were seized.

The suspects purchased personal identifying information of individuals who did not live in California from the dark web and enrolled them in Medi-Cal. The scheme did not rely on medical loopholes but on identity theft and corporate shells. Having fabricated a pool of ghost patients, the alleged conspirators then acquired 14 hospice companies and billed the state for end-of-life care that was never rendered. The 21 charged face counts including conspiracy to commit health care fraud, health care fraud, money laundering, and aggravated identity theft, with enhancements for aggravated white-collar crimes.

"This isn't a political game for us. This is about protecting taxpayer dollars, protecting the programs that sick and vulnerable Californians rely on, and protecting our state," Bonta said at the news conference in Los Angeles.

The scheme exposed structural vulnerabilities that regulators had long struggled to close in Southern California's hospice sector. In one case, the auditor found 210 active hospice agencies located within a mile of each other in the Van Nuys neighborhood. One office building in the neighborhood was supposedly listed as the address of more than 150 licensed hospice and health agencies, which appeared to exceed the building's physical capacity. In many cases, the hospice agencies weren't listed on building directories, and in some cases the agency's name was only on a paper sign. That kind of layered address fraud makes ownership structures nearly impossible to trace through routine document review alone, which is precisely why investigators named their operation after the skip-tracing technique used to locate people who don't want to be found.

California has taken more aggressive action on hospice licensing than any other state, though the $267 million figure signals the limits of what structural reforms alone can accomplish. Governor Newsom signed Senate Bill 664 into law to ban new hospice licenses due to concerns about fraud and abuse in this sector and has extended this moratorium, halting growth in a sector vulnerable to abuse while strengthening oversight. This moratorium was extended through the Governor's signature of AB 177. California has revoked more than 280 hospice licenses and is investigating hundreds more providers as part of the state's efforts to combat fraud in its end-of-life care system. The Department of Health Care Services has also updated its claims systems to block hospice payments unless a valid provider and enrollee authorization form can be verified.

The arrests arrived against a charged political backdrop. The U.S. House of Representatives Committee on Oversight and Government Reform launched an investigation into "rampant" hospice fraud in California in a March 23 letter to Governor Newsom, with committee members questioning whether the state's internal controls were sufficient to detect and prevent fraud across its federally funded hospice programs. The June 2025 Justice Department national health care fraud takedown was the largest in history, with 324 defendants charged across 50 federal districts and $14.6 billion in alleged losses.

For states watching California's enforcement trajectory, the Operation Skip Trace case offers a direct lesson: enrollment-stage fraud, where stolen identities create fictitious patients before a single billing record is generated, requires data-matching capabilities that go beyond standard auditing cycles. Prosecutors said they expect to pursue additional arrests and charges as the investigation continues.