California’s hospice industry has exploded under Gov. Gavin Newsom’s watch, with hundreds of facilities in Los Angeles County triggering fraud red flags while billing Medicare.
When investigators began reviewing licensing records and Medicare billing data, a troubling pattern quickly emerged across hospice providers operating throughout Los Angeles County. Auditors and regulators examining the filings began noticing the same warning signs appearing again and again in the industry.
“More than 700 of the roughly 1,800 hospice agencies in Los Angeles County had two or more indicators commonly associated with fraud… raising concerns about whether some providers are exploiting the system.”
California’s own auditors have been warning about the industry’s rapid expansion for years. Licensing approvals surged while oversight lagged, allowing hundreds of new hospice companies to enter the market even as regulators struggled to monitor the ones already operating.
The scale of the industry alone raised questions. Los Angeles County now has nearly two thousand hospice providers serving a single region, a number that drew closer scrutiny once investigators began following the billing data flowing through the system.
“Auditors found that Los Angeles hospice providers overbilled Medicare by about $105 million between 2017 and 2019.”
That money trail eventually forced investigators to ask a more basic question. If Los Angeles County suddenly had nearly two thousand hospice providers, where exactly were all of them operating?
When regulators began combing through licensing records, the industry’s explosive growth stopped looking like a health care boom. The paperwork told a very different story. The same addresses kept appearing. The same administrators kept appearing. In some cases, the same physicians were listed across multiple hospice companies. What was supposed to be a sprawling network of independent providers increasingly looked like clusters of companies stacked on top of one another inside the same filings.
One location appeared so often that investigators began looking more closely.
“State records list 89 hospice agencies registered at the same address in Van Nuys. The building owner told investigators that only about 12 companies actually operate from the location.”
State licensing records show hospice companies tied to that single address were approved to operate and bill Medicare through California’s regulatory system.
Investigators now have a term for operations that appear legitimate on paper but collapse under scrutiny: ghost hospices. They show up in licensing databases and Medicare billing records as functioning medical providers, yet when regulators attempt to locate them, the operations behind the paperwork are often shells or nonexistent.
As auditors kept pulling on that thread, the same names kept surfacing again and again across different companies. Administrators responsible for running hospice agencies appeared in multiple filings, while doctors listed as medical directors showed up across overlapping networks of providers scattered across Los Angeles County. (California State Audit via CBS News)
Then, investigators uncovered a number that illustrated how extreme the system had become.
“In the most extreme case, a single medical director has been listed as working simultaneously at 45 different hospices. The state audit said the medical director’s responsibilities are so great, it would be difficult to hold that position at so many companies.
The report also questioned whether one person could serve multiple hospices as administrator, finding each position requires 20-40 hours per week, making it virtually impossible to run more than two or three agencies at once.”
Under Gov. Gavin Newsom’s administration, California allowed the hospice industry to expand at a staggering pace. Nearly 2,000 providers now operate in Los Angeles County alone, hundreds of which have already triggered fraud warning indicators by sharing addresses, administrators, and medical directors across overlapping networks of companies.
And billions of Medicare dollars continued moving through the system while regulators tried to catch up with how large the industry had already become.
As CBS highlighted in its investigation, one of the people caught in the system was Lynn Ianni, a 69-year-old Los Angeles resident who discovered the problem when she tried to schedule physical therapy, and Medicare refused to cover the treatment.
The explanation made no sense. According to Medicare’s records, she was already enrolled in hospice care.
Ianni had never signed up for hospice. She was not terminally ill and had never requested the service. Yet somewhere in the system, her Medicare number had been used to place her in a program meant for patients nearing the end of life.
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That single entry in the database changed everything.
Hospice enrollment alters how Medicare pays for treatment. Patients listed as receiving hospice care are generally expected to stop pursuing certain curative services, which means other treatments can suddenly be denied once the enrollment appears in the system.
In Ianni’s case, the fraudulent hospice listing meant Medicare rejected care she was actually trying to receive.
Someone had used her Medicare information to enroll her in hospice and bill the government for services she never requested.
While the 69-year-old Los Angeles resident was trying to correct her own medical records and regain access to care, investigators were uncovering a far larger problem spreading through California’s hospice industry — a system where hundreds of suspicious providers were able to multiply, bill Medicare, and operate across Los Angeles County before California’s government stepped in to stop it.
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