California Authorities Arrest Five in $267 Million Hospice Fraud Investigation

California law enforcement officials arrested five individuals on Wednesday in Southern California as part of Operation Skip Trace, a large-scale effort to dismantle an alleged hospice fraud network that officials say defrauded the state Medi-Cal program of $267 million. The California Department of Justice confirmed the arrests and stated that charges have been filed against a total of 21 suspects, with additional arrests anticipated.

According to California Attorney General Rob Bonta, suspects in the case collected payments from Medi-Cal—California's Medicaid program—without providing legitimate hospice services. Authorities allege that participants in the scheme purchased non-residents' identifying information from the dark web, used stolen identities to enroll in Medi-Cal, and operated 14 state-licensed hospice agencies solely to bill for fraudulent services. No genuine hospice care, actual facilities, or documentation existed for the patients listed in the scheme, investigators said.

The charged offenses include conspiracy to commit health care fraud, health care fraud, money laundering, identity theft, and additional enhancements for aggravated white collar crime and money laundering. Those named in the complaints were licensed by the California Health and Human Services Agency to submit bills to Medi-Cal, underscoring concerns about regulatory vulnerabilities in the system.

The investigation, initially prompted by the California Department of Health Care Services (DHCS), takes place amid heightened scrutiny of hospice care providers. Tyler Sadwith, chief deputy director of health care programs and California state Medicaid director, reported that the state is currently investigating more than 300 hospices for possible license revocation, with over 700 out of approximately 1,800 hospices in Los Angeles County exhibiting multiple red flags for fraud based on recent state audit indicators.

Federal authorities are also engaged in related health care fraud investigations, including a recent operation that resulted in eight arrests connected to more than $50 million in alleged fraudulent billings, according to the U.S. Department of Justice.

State leaders have emphasized the importance of safeguarding publicly funded health programs and maintaining the integrity of Medi-Cal. The investigation remains active as law enforcement pursues additional suspects, with prosecutions pending for those already charged.