California dismantles $267 million hospice fraud ring in 'Operation Skip Chase'; 21 charged
California targets alleged criminal hospice scheme
California authorities dismantled a massive hospice fraud ring that billed the state for $267 million without providing a single legitimate service to patients.
LOS ANGELES - California Attorney General Rob Bonta and the Department of Health Care Services (DHCS) have announced the takedown of a staggering $267 million healthcare fraud ring.
The operation, which involved 21 suspects and 14 fraudulent companies, targeted the state’s Medi-Cal system by billing for hospice services that were never rendered.
What we know:
The investigation, dubbed "Operation Skip Trace," culminated on Wednesday, April 8, with search and arrest warrants executed at 12 locations across Southern California, Bonta said during a press conference detailing the operation on Thursday.
Bonta announces CA hospice fraud takedown
California Attorney General Rob Bonta, together with the California Department of Health Care Services (DHCS), today announced charges filed against 21 suspects and the dismantling of a major hospice fraud scheme that defrauded California of $267 million.
Investigators discovered that the suspects purchased personal identifying information of non-California residents on the dark web, then used "straw owners" to buy 14 hospice companies and bill the state for end-of-life care.
PREVIOUS COVERAGE:
- Operation Never Say Die: 8 arrested in $50M California hospice fraud takedown
- Inside the $60M takedown: 8 Southern California cases under Medicare fraud investigation
- DOJ targets California’s ‘kingdom of fraud’ in massive $60M hospice takedown
Law enforcement seized $757,000 in cash and two firearms during the raids.
The 21 suspects now face charges including conspiracy to commit health care fraud, money laundering, and identity theft, with additional enhancements for aggravated white-collar crime.
What we don't know:
While 21 suspects have been charged, officials have not yet confirmed if additional arrests are expected as the investigation into the 130 associated shell companies continues.
It is also unclear exactly how much of the $267 million in defrauded funds can be successfully recovered; Bonta noted that only about $30 million has been retrieved so far.
What they're saying:
"Over the life of this fraud scheme, not a single legitimate hospice service was ever provided, yet millions were billed in a brazen, calculated scheme that exploited the Medi-Cal system," Bonta said.
"Our safeguards worked as designed: we identified irregularities early, stopped further improper payments, and suspended the fraudulent providers, DHCS Director Michelle Baass said.
RELATED COVERAGE: Feds cracking down on healthcare fraud
The DOJ’s "Operation Never Say Die" unsealed charges against 15 individuals in a $60 million Medicare hospice scheme.
"For years, California has led the charge to protect public programs from fraud and abuse," Newsom said Thursday. "We hold accountable to the fullest extent of the law anyone who tries to rip off taxpayers and take advantage of public programs, particularly those as sensitive as hospice care."
The crackdown comes as the federal government has increased efforts to target hospice fraud.
"Fraud hasn’t always been a priority at the Department of Justice, particularly fraud against taxpayers. That is changing. Because when you defraud these programs, not only are fraudsters getting away with our money, it’s taking the money away from the people who really need it," said U.S. Attorney Bill Essayli during an appearance on "Good Day LA" Thursday morning.
Bonta said combating health care fraud has long been a focus in California.
"While health care fraud might be President Donald Trump’s shiny new political talking point, California DOJ has been going after health care fraud since 1979," Bonta said.
State officials also highlighted additional safeguards aimed at preventing future fraud.
"We are using a faster and more secure online process and we’re adding stronger checks to prevent fake applications or stolen identities from getting into the system," said Kim Johnson, secretary of the California Department of Health and Human Services.
California has also imposed a moratorium on new hospice agency licenses, which took effect in 2022 and is set to remain in place through 2027.
The state said it has revoked 280 licenses since the moratorium began, and officials noted the companies involved in this case had held licenses for several years.
What you can do:
State officials are urging Californians to watch for red flags of hospice fraud, such as:
- Patients being signed up for hospice who are not terminally ill.
- Offers of gift cards, groceries, or cash in exchange for enrollment.
- Receiving Medi-Cal statements for services that were never provided.
To report fraud, visit oag.ca.gov/dmfea/reporting or call the toll-free complaint line at (800) 722-0432.
The Source: This report is based on official statements and press releases from the California Department of Justice and the Office of Attorney General Rob Bonta following the execution of "Operation Skip Trace."