'Operation Never Say Die': 8 arrested in $50M California hospice fraud takedown

LOS ANGELES - A major federal crackdown on California’s healthcare industry has resulted in eight arrests for a "sham" hospice scheme that allegedly defrauded Medicare of over $50 million.

What we know:

Federal prosecutors have unmasked a sophisticated "pay and chase" scheme where fraudsters obtained legitimate California hospice licenses to bill Medicare for millions. 

Dubbed "Operation Never Say Die," the investigation revealed that defendants allegedly billed the government approximately $5,000 to $6,000 per patient per month. 

In some instances, patients were paid $300 kickbacks to pose as terminally ill, while in others, their names were used without their knowledge.

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U.S. Attorney Bill Essayli confirmed that 15 separate cases have been announced, involving nearly $60 million in total fraudulent claims. 

The proceeds were reportedly spent on luxury cars, homes, and international vacations. 

What we don't know:

While authorities have seized some bank accounts and property, the exact amount of the $50 million that is recoverable remains unknown, as much of the money is believed to have been funneled to international organizations. 

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Whille Essayli suggests total fraud could reach hundreds of billions, the specific scale of remaining "sham" hospices still operating in California has not been disclosed.

What they're saying:

"Our criticism of the state of California is that they don’t have sufficient measures in place to prevent and detect fraud in the first instance," Essayli said. 

"Accountability is important, because if people do not get arrested and go to prison for a long time, other people will not be deterred," he added. "We want people to know it’s not worth it. Don’t do it. We will wake you up at 6 a.m. with the FBI."

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Essayli placed the blame on state administrative failures.

"Our criticism of the state of California is that they don’t have sufficient measures in place to prevent and detect fraud... We don’t want to pay and chase, we want to stop the fraud from happening in the first place."

In response, Governor Gavin Newsom and Attorney General Rob Bonta have pushed back, noting that Medicare is a federally overseen program. 

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What's next:

The federal government, in coordination with Dr. Mehmet Oz (who oversees Medicare/CMS), plans to implement stricter vetting processes for hospice providers to ensure they are legitimate before they can access billing systems. 

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Essayli signaled that his office is looking to expand its team of attorneys to target other vulnerable programs, including SNAP (food stamps).