California raids hospice locations, alleges $267M in fraud

The California Department of Justice said Thursday it raided a massive alleged hospice fraud scheme in Los Angeles County. State officials said the scheme defrauded $267 million from Medi-Cal, the state-administered Medicaid program. Five people were arrested in connection on suspiscion of fraud, said California Attorney General Rob Bonta. Earlier this month, charges were filed against a total of 21 suspects in three different criminal complaints. Those individuals were charged with conspiracy to commit healthcare fraud, money laundering, and identity theft. They are presumed innocent until proven guilty.

The California Department of Justice noted that it served search and arrest warrants across at least 10 locations in Southern California on Wednesday. Bonta said that the scheme did not provide a single legitimate hospice service, yet swindled millions of dollars in what he characterized as brazen, calculated criminal acts.

How was the scheme carried out? The individuals are charged with purchasing identifying information for out-of-state residents on the dark web, Bonta said in a Thursday news conference. They are accused of fraudulently enrolling out-of-state people in Medi-Cal. Straw owners bought 14 hospice companies where the alleged conspirators billed the government for hospice care supposedly provided to the stolen identities, according to the California Justice Department. No hospice services were ever rendered, Bonta noted. Instead, the so-called patients were out of state and unaware that they were enrolled in California hospice care. After the scammers received the money from the government, they allegedly funneled it through a web of more than 130 shell companies, Bonta said.

Have there been any federal charges? Last week, the U.S. Department of Justice arrested eight individuals in California and Idaho for swindling hospice centers out of $50 million. As of Friday, it was unclear if this scheme was connected to the one in Southern California. 

Dig deeper: Read my report on two Michigan brothers who stole nearly $2 million by running fraudulent pharmacies.