California Hospice Fraud Exposed - $3.2 Billion

The Rest of the Iceberg

Citizen journalists have played a major role in exposing the fraud in Minnesota. Politicians have been saying that fraud in California will be the "rest of the iceberg" when compared to Minnesota.

"Now Southern California's hospice sector has emerged as ground zero for one of the most brazen Medicare fraud schemes in recent U.S. history, with CMS Administrator Dr. Mehmet Oz alleging roughly $3.5 billion in improper billing. As he intensifies scrutiny through high-profile visits and videos exposing suspicious clusters in areas like Van Nuys the fraud becomes exposed and public awareness grows.

Critics accuse Governor Gavin Newsom's administration of playing the worn-out claims of racism. Instead of addressing the fraud, Newsom claimed that Dr. Oz was simply practicing racial profiling. Newsom also doubled down by boasting of the state's efforts to combat fraud since 2021. Experts view this scandal as the tip of a massive statewide fraud iceberg potentially exceeding $250 billion, underscoring the State's failures in oversight and accountability.

Dr. Oz, Administrator tor Center for Medicare and Medicaid Services and Bill Essayli, Assistant DoJ AG for Calif. discuss fraud. - image courtesy of www.abc7.com

Hospice Fraud: An Epidemic of Exploitation

The fraud stems from an explosion of hospice providers in Los Angeles County, where federal investigators have flagged hundreds of potentially sham operations. Common schemes involve enrolling non-terminal patients—often without consent—billing for undelivered services, and offering kickbacks for referrals. In Van Nuys, dozens of hospices crowd a tiny radius, signaling organized fraud rings that have proliferated unchecked.

Dr. Oz, appointed under the Trump administration, drew national attention during his January 2026 visit. He released videos spotlighting the "epidemic" and noting ties to Armenian-American communities—a claim that ignited backlash but highlighted geographic clustering.

Federal prosecutions remain aggressive, with 2025 cases yielding sentences for multi-million-dollar schemes, such as a $16 million fraud tied to fake enrollments. Yet the issue endures: 2026 reports detail ongoing large-scale abuse, prompting the Department of Justice (DOJ) to uncover new layers. Congressional hearings are in progress, and Oz has pledged to recover billions, sharply contrasting state-level inaction.

California's Response: Supposed Efforts Fall Short

In 2021, Governor Newsom signed legislation imposing a moratorium on new hospice licenses effective 2022—a step his office hails as proactive. Since then, the state has revoked over 280 licenses, charged 109 individuals, filed 24 civil suits, and reviewed 300 more hospices. Officials note California is unique among high-fraud states like Arizona, Nevada, and Texas in enacting a full ban.

However, these measures have proven insufficient against the fraud's scale. The moratorium merely blocked new entrants, sparing pre-2022 operators and allowing scams to persist. Recoveries are modest, reclaiming millions but falling far short of the $3.5 billion hospice losses. Federal voices contend the state's actions have failed to curb the problem, justifying national steps like Oz's crackdown and DOJ involvement.

Reacting to Oz's visit, Newsom filed a civil rights complaint on January 29-30, 2026, alleging discriminatory targeting of Armenian-Americans and calling for a federal probe. Critics see this as deflection, favoring political battles over effective fraud prevention, particularly as the administration labels federal oversight "politically motivated."

Beyond Hospice: The Broader Fraud Iceberg

Though hospice fraud dominates headlines, it exemplifies California's wider crisis. The state has spent $24 billion on homelessness initiatives with scant results, plagued by audits exposing chaotic anti-fraud policies and incidents like a $50 million LA siphoning scheme. Pandemic unemployment fraud reached up to $32 billion through hasty payouts to ineligible recipients, including inmates. A December 2025 state audit deemed Newsom's office and agencies "high-risk" for waste, with total fraud estimates surpassing $250 billion.

President Trump's recent vow for a sweeping federal investigation into California fraud—alongside arrests like that of Newsom's former chief of staff on unrelated charges—has amplified demands for accountability. As a whistleblower noted, California has earned the label "America's fraud capital," with hospice serving as a stark illustration of how state efforts, despite bold claims, have let taxpayers down.

With DOJ referrals hitting $3.4 billion and further hearings ahead, the pressing question remains: Will California confront the full iceberg, or persist in defending the status quo?

Sources:

Sources for the Article: "The Rest of the Iceberg: California's Hospice Fraud Epidemic and the State's Inadequate Response"

1. California Gov. Newsom files civil rights complaint against Dr. Oz in latest clash with the Trump administration PBS News - Details Newsom's civil rights complaint accusing Oz of discrimination in his hospice fraud video.Link: https://www.pbs.org/newshour/politics/california-gov-newsom-files-civil-rights-complaint-against-dr-oz-in-latest-clash-with-the-trump-administration

2. Newsom files a civil rights complaint against CMS' Oz in latest feud with the Trump administration STAT News - Covers Newsom's acknowledgment of fraud but emphasis on state crackdowns, including the 2022 moratorium.Link: https://www.statnews.com/2026/01/30/gavin-newsom-civil-rights-complaint-mehmet-oz-cms

3. Dr. Oz is back on camera in Los Angeles. This time for Trump POLITICO - Discusses Oz's street-level investigation and California's response, including license revocations.Link: https://www.politico.com/news/2026/01/30/why-dr-oz-is-spending-time-outside-armenian-bakeries-00756440

4. Newsom files a civil rights complaint against Dr. Oz over accusations against LA Armenian community The Hill - Quotes Oz's video claims of $3.5 billion in fraud and Newsom's mockery of Oz on social media.Link: https://thehill.com/homenews/state-watch/5715586-newsom-oz-armenian-fraud-allegations

5. Newsom fights back after Dr Oz accuses LA's Armenians of healthcare fraud The Guardian - Outlines the conflict's origins in Oz's Van Nuys video and Newsom's complaint.Link: https://www.theguardian.com/us-news/2026/jan/30/mehmet-oz-fraud-claims-gavin-newsom

6. California Revokes 280 Hospice Licenses in Fraud Fight; Congressional Hearing Set Hospice News - Updates on state actions under Newsom and federal scrutiny from CMS.Link: https://hospicenews.com/2026/01/28/california-revokes-280-hospice-licenses-in-fraud-fight-congressional-hearing-set

7. California Gov. Newsom files civil rights complaint against Dr. Oz USA Today - References a 2020 LA Times investigation on hospice fraud and state responses.Link: https://www.usatoday.com/story/news/nation/2026/01/30/newson-civil-rights-complaint-dr-oz-video/88431268007

8. Newsom files a civil rights complaint against Dr. Oz in latest feud with the Trump administration ABC News - Describes Oz's video references to a $16 million fraud scheme and state revocations.Link: https://abcnews.go.com/US/wireStory/newsom-files-civil-rights-complaint-dr-oz-latest-129703755

9. California Fraud Update CMS Administrator Dr. Oz on Facebook - Oz's video update on fraud, instructing Newsom to produce an action plan.Link: https://www.facebook.com/DrOzCMS/videos/california-fraud-update/1429096208610554

10. Newsom, Dr. Oz feud intensifies over Armenian 'mafia' hospice fraud claims in Los Angeles FOX LA - Covers Oz's claims of 42 fraudulent hospices and Newsom's dismissal as a stunt.Link: https://www.foxla.com/news/oz-newsom-california-hospice-fraud-dispute

11. Gavin Newsom files civil rights complaint against Dr. Oz KCRA - Local coverage of Newsom's complaint in response to Oz's video.Link: https://www.kcra.com/article/gavin-newsom-files-complaint-dr-oz-health-care-fraud/70201963

12. Newsom files civil rights complaint accusing Dr. Oz of targeting Armenian Americans CBS News Los Angeles - Quotes Oz's $3.5 billion fraud claim and Newsom's complaint.Link: https://www.cbsnews.com/losangeles/news/newsom-files-civil-rights-complaint-accusing-dr-oz-of-targeting-armenian-americans

13. Oz accuses California governor of 'tolerating' home care fraud, requests action plan McKnight's Home Care - Details Oz's accusations against Newsom and calls for a fraud plan.Link: https://www.mcknightshomecare.com/news/oz-accuses-california-governor-of-tolerating-home-care-fraud-requests-action-plan

14. Dr. Oz travels to L.A. seeking fraud. Newsom says his findings are 'baseless and racist allegations' Los Angeles Times - Reports on Oz's Van Nuys video and Newsom's civil rights filing.Link: https://www.latimes.com/california/story/2026-01-29/dr-oz-accused-la-armenians-of-fraud-newsom-files-civil-rights-complaint

15. Newsom Files Civil Rights Complaint Against Dr. Oz Over Fraud Video The New York Times - Covers Oz's video accusing Armenian Americans and Newsom's response.Link: https://www.nytimes.com/2026/01/29/us/newsom-oz-fraud-armenians.html