Stop LA County Fraud: Fake hospice firms allegedly steal millions

Los Angeles County has become the center of one of the largest alleged hospice fraud schemes in recent memory. Federal and state investigators say operators opened shell companies, recruited fake patients, and billed Medicare and Medi-Cal for services that were never performed. The alleged schemes have drained hundreds of millions from public programs that fund end-of-life care.

State and federal probes converge

California Attorney General Rob Bonta announced a sweep that targeted 14 hospice companies tied to an operation called Skip Trace. Prosecutors say the ring bought stolen identities, enrolled out-of-state residents in Medi-Cal, and billed roughly $267 million for nonexistent care. More than $30 million has been recovered so far.

The U.S. Attorney’s Office in Los Angeles launched a parallel federal case called Operation Never Say Die. Agents arrested eight people, including the operator of Topanga Hospice Care, which allegedly submitted $9.17 million in false claims. The combined cases illustrate how both state and federal programs were exploited at the same time.

Investigators say the schemes relied on stolen identities purchased on the dark web, straw owners, and dozens of shell companies. Cash and luxury cars were seized during raids, and some operators funneled proceeds through cryptocurrency accounts.

Dead patients and ghost billing

One recent indictment charged Van Nuys operator Oren David Shachar with billing Medicare nearly $27 million using identities of deceased people obtained from funeral-home workers. Prosecutors say Shachar paid $1,000 to $3,000 per identity and used the proceeds to buy a $530,000 Rolls-Royce Phantom.

The scheme allegedly involved four hospices, including Gentle Touch Hospice and Oxford Hospice Care. Investigators found no medical records, patient visits, or medication logs to support the claims.

The use of dead-patient identities is not new in health-care fraud, but the scale and the direct link to funeral homes mark this case as unusually brazen.

Why LA County stands out

A CBS News analysis of roughly 1,800 licensed hospices in Los Angeles County found that 42 percent, or 742 companies, triggered multiple state fraud indicators. Those markers include multiple hospices sharing one address, unusually high billing per patient, and clusters of providers far from their supposed service area.

LA hospices billed Medicare an average of $29,000 per patient, more than double the national average of $13,200. Some billed as much as $74,000. A state audit estimated $105 million in overbilling in a single year.

The county’s hospice count has grown 1,500 percent since 2010, far outpacing its senior population. Investigators say the density of providers in small areas, such as 137 hospices along one stretch of Van Nuys Boulevard, created an environment where oversight became nearly impossible.

How the schemes operated

Prosecutors describe a repeatable playbook. Recruiters approached people at senior centers or through online ads and offered cash or free services in exchange for signing hospice paperwork. Many recruits were not terminally ill.

Straw owners, often paid a few hundred dollars, put their names on corporate filings. Licensed nurses or billers submitted claims under the company’s Medicare and Medi-Cal numbers. Payments were routed through payment apps and layered accounts to obscure the trail.

Some companies existed only on paper. Investigators found no offices, no medical staff on site, and no patients receiving visits. The only activity was the flow of government reimbursements into bank accounts controlled by the operators.

Taxpayer impact

Medicare is funded by federal payroll taxes and premiums. Medi-Cal draws from state general funds and federal matching dollars. When fraudulent claims are paid, the cost is ultimately borne by taxpayers nationwide.

Federal estimates place suspected hospice and home-care fraud in Los Angeles at roughly $3.5 billion over recent years. The $267 million Skip Trace case and the $27 million Shachar indictment represent only the largest charged portions of that total.

Each dollar lost to fraud reduces funds available for legitimate hospice patients who need pain management, nursing visits, and family support during terminal illness.

Enforcement and recovery

State regulators have revoked licenses for about 280 hospices in recent years. Federal task forces have suspended hundreds more from billing. Asset seizures have included cash, vehicles, and real estate tied to the alleged schemes.

Prosecutors are also pursuing civil remedies under the False Claims Act, which allows the government to recover treble damages plus penalties. Several operators have already agreed to repay millions while criminal cases proceed.

Investigators say continued coordination between state and federal agencies is essential, because the schemes crossed program lines and state borders.

Red flags regulators now watch

State auditors have published a list of indicators that flag potential fraud. Multiple hospices registered at a single address, sudden spikes in patient enrollment, and billing far above regional norms all draw scrutiny.

Geographic mismatches are another signal. When patients list addresses hundreds of miles from the hospice’s listed location, investigators look for evidence that recruiters simply collected signatures without providing care.

Shared staff across multiple companies and unusually high per-patient revenue also trigger audits. Regulators now cross-check death records against active hospice claims to catch ghost-patient billing earlier.

Changes in oversight

California has tightened licensing rules, requiring proof of physical office space and minimum staffing levels. Federal Medicare contractors have increased prepayment reviews for hospices in high-risk counties.

Some lawmakers have called for a temporary moratorium on new hospice licenses in Los Angeles until the backlog of investigations clears. Others want higher minimum penalties and faster exclusion of convicted operators from future billing.

Advocacy groups argue that legitimate hospices suffer when fraud inflates costs and invites blanket restrictions. They push for targeted enforcement rather than broad limits on new providers.

What happens next

Additional indictments are expected as investigators trace payments through the more than 130 shell companies linked to the Skip Trace ring. Civil recovery actions will continue even if some criminal defendants flee or assets are hidden overseas.

Medicare and Medi-Cal are tightening enrollment screening and data analytics to spot clusters of suspicious claims before payments are issued. Real-time identity verification and cross-checks with death records are already in pilot programs.

Taxpayers will continue to fund end-of-life care, but the recent enforcement actions show that large-scale LA County fraud can be disrupted when state and federal agencies share data and act quickly.

Looking ahead

The recent arrests and license revocations have slowed some of the most obvious schemes, yet investigators warn that new operators are already testing fresh tactics. Sustained funding for audits, faster licensing reviews, and stronger penalties will determine whether the recent drop in fraudulent billing holds or whether another wave of fake hospices emerges in Los Angeles County.