Healthy California seniors trapped in fake hospices as $3.5B Medicare fraud scheme exposed

Land of milk and honey? More like fraud and funny money.

Federal officials estimate Los Angeles County alone accounts for $3.5 billion in fraudulent hospice claims as more victims come forward with stories of abuse.

Fraudsters have allegedly created fake hospices, stolen identities and enrolled people in end-of-life care to bill Medicare.

The scam can have serious consequences for victims. Because hospice is intended for terminally ill patients, Medicare generally won’t pay for medical treatment outside hospice once someone is enrolled.

At 71 and recently retired, Linda Henry thought she was in good health.

Then in 2024, she discovered Medicare records said she had heart failure — and that she had been enrolled in hospice, despite never signing up.

That meant Henry’s regular medical care was suddenly in jeopardy.

She discovered the problem after her doctor tried to bill Medicare for an allergy test in September 2024 and the claim was denied. Other medical claims soon bounced back too.

Henry spent months calling Medicare and emailing officials while her doctor provided a letter saying she was healthy.

She was allegedly enrolled with Fortuna Hospice Inc., which didn’t answer her calls. When Henry drove to the address listed for the company, she found what appeared to be an empty office.

“I delayed physical appointments and my colonoscopy and all this stuff because I knew that we were going to fight about this and it wasn’t going to get paid,” she told the AP.

Eight months later, Medicare finally recognized Henry as a fraud victim. It took another four months before she began seeing doctors again.

California has been a major target of the federal crackdown as The California Post has reported. The state had about 2,100 hospice organizations in 2026, down from 2,800 four years earlier, according to the AP. A 2022 state audit found dozens of hospice agencies clustered in the same buildings, along with other red flags.

“This is a California problem,” First Assistant US Attorney Bill Essayli said at an April press conference. “I call California the kingdom of fraud, and Gavin Newsom reigns over this kingdom here.”

California has revoked nearly 500 hospice licenses since imposing a moratorium on new hospices in 2021, while new emergency regulations adopted in June tightened requirements for new licenses. More than 1,000 California hospices were removed from Medicare since early 2025.

But advocates warn the fraud can do more than drain taxpayer dollars — it can prevent vulnerable seniors from getting the care they actually need.

“She died two months later in a skilled nursing facility. That did not need to happen,” California Hospice and Palliative Care Association CEO Sheila Clark testified about one woman who was falsely enrolled in hospice and couldn’t get cataract surgery approved.

“These scammers here are going to do whatever they have to do to try and survive, and we need to work at the state level and the federal level to make sure that we are going to clean house.”