\n<\/p>\n
Authorities have failed to stop widespread fraud in the hospice industry despite promises of reforms five years ago after widespread corruption targeting vulnerable patients was revealed. <\/p>\n
After a Times investigation in late 2020 revealed that a group of mostly elderly Americans were being targeted by unscrupulous providers who would bill Medicare for hospice services and equipment for patients they said were terminally ill but who were not actually dying, California officials promised to crack down.<\/p>\n
The hospice industry, especially in Los Angeles County, had exploded in size, far exceeding the public need.<\/p>\n
One of California’s first steps was to pause the issuance of new hospice licenses to give officials time to strengthen oversight. State officials and industry representatives drafted emergency rules that they said would close loopholes in hospice licensing requirements to weed out bad actors. <\/p>\n
But even after years those rules have not been implemented. Experts say problems continue to plague the industry despite highly publicized enforcement efforts by the state and federal government. <\/p>\n
The Trump administration has seized on California hospice fraud with a series of new arrests in recent months, while blaming state officials for dropping the ball. California rejected the criticism but last week announced a major investigation into providers who officials said defrauded taxpayers of more than $260 million.<\/p>\n
“This is not a red versus blue issue,” said Sheila Clark, president and chief executive of the California Hospice and Palliative Care Association. “This is not political… We care about the beneficiary and the profit, full stop. That’s what we’re protecting.”<\/p>\n
Body camera footage shows law enforcement raiding a home this week in connection with a hospice fraud investigation. <\/p>\n
(California Department of Justice)<\/p>\n<\/p><\/div>\n<\/figure><\/div>\n
Although fraud in the industry has existed for years, the scope of the problem became clear five years ago, with The Times’ reporting and subsequent state audit in response.<\/p>\n
The audit report, published in 2022, called for a series of emergency rules to be implemented within a year to “protect the health and safety of current and future hospice patients.” <\/p>\n
The rules included setting limits on the distance and time hospice agency staff must travel to see patients, establishing the ratio of patients to nurses, ensuring that hospice management had hospice-specific training, verifying that hospice management was actually affiliated with the agencies on applications, and verifying medical licenses. <\/p>\n
The proposed regulations call for an initial site visit to the hospice, as well as unannounced follow-up visits, to ensure it is set up to care for patients. <\/p>\n
The state has already launched a fraud task force to share data between departments to address complaints about hospices. <\/p>\n
But, four years later, those emergency rules are no longer in place. Clark, who heads the California Hospice and Palliative Care Association, has been struggling to find clarity on the issue. <\/p>\n
Clark said, “I’m shocked. My membership is shocked as to why they haven’t been effective because we knew it would help. We’re at a standstill right now.” \u201cIf we don’t have these rules in place, it will be open season again in hospice.\u201d <\/p>\n
A spokesperson for the California Department of Public Health said the draft rules, which were to be implemented by Jan. 1, 2026 under state law, were being revised after receiving “valuable stakeholder feedback.” <\/p>\n
“In the meantime, CDPH continues to enforce the moratorium and take actions to prevent and address fraud,” the agency said.<\/p>\n
Susan Fennelly, chief deputy director of the California Department of Public Health, said, once enacted, it will become more difficult to become licensed as a hospice and hospices already operating will have to come into compliance. <\/p>\n
\u201cI think the best way to fight fraud is to partner not only with the state but with the federal government and share information so we can really work together to prevent fraud,\u201d Fanelli said. \u201cWe are all interested in the quality of care and making sure the dollars are getting to the patients who need it.\u201d <\/p>\n
Hospice fraud re-emerged as an issue in January when Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid Services, visited a series of corridors in the Van Nuys area of \u200b\u200bthe San Fernando Valley \u2014 what he calls “ground zero” for hospice fraud. In a video shot from the second-row passenger seat of his SUV, Oz pointed to medical signs on a stretch of Victory Boulevard and noted that in the immediate area, 42 hospices were registered. <\/p>\n
This month, he returned to lead a SWAT raid to capture two men as part of a broader investigation into several hospice owners accused of defrauding taxpayers of $50 million in false claims. <\/p>\n
A political football ensued, with state and federal governments blaming each other for not doing enough to stop the fraud. <\/p>\n
First Assistant US Atty. Bill Essay accused California of not vetting hospice providers when licensing them.<\/p>\n
California officials hit back, with Governor Gavin Newsom writing on Twitter that “the Trump administration \u2013 home to the biggest fraudsters on Earth \u2013 is trying to blame California for the issues with its federal programs.” <\/p>\n
Ado Banach, former head of the National Hospice and Palliative Care Organization, the largest U.S. trade group for hospices, said both federal and state governments have a role to play in preventing bad actors from operating in the industry. <\/p>\n
He said, “Despite going after providers in California, the federal government has a role in determining whether entities can bill Medicare to begin with. So it’s not just a state thing. It’s everybody’s problem.”<\/p>\n
A spokeswoman for the Centers for Medicare and Medicaid Services said the agency regularly monitors unusual billing patterns and complaints to identify fraud. <\/p>\n
For years, officials say, the hospice industry, designed to provide comfort and guidance to dying patients and their families in their final days, has attracted scammers lured by large Medicare payouts. <\/p>\n
Authorities allege such operators engaged in a range of illegal activities, including bribing shady doctors and recruiters who targeted potential patients at assisted living facilities and other locations with promises of equipment, nursing care and other necessities. <\/p>\n
In fact, patients who unknowingly enrolled in hospice found that they could not receive any palliative care, meaning access to certain medications and life-sustaining treatments such as dialysis were immediately cut off. <\/p>\n
And not just in California. Hospice fraud has been an issue across the country, including Texas, Georgia, Ohio, Nevada, Arizona and New York. <\/p>\n
But the rapid growth of the hospice industry in Los Angeles County has drawn particular scrutiny. <\/p>\n
State Assemblywoman Alexandra M. Macedo (R-Tulare) questioned the repeated delays in controlling the problem, pointing to a previous report by The Times showing that a lack of oversight gave fraudsters an opportunity to make money. <\/p>\n
\u201cDelays only harm vulnerable patients and their families, encourage fraud and create problems for legitimate operators providing essential services, particularly in rural and disadvantaged communities,\u201d he said.<\/p>\n
From 2010 to 2020, hospices in Los Angeles County grew sixfold, accounting for more than half of the state’s nearly 1,200 Medicare-certified providers and vastly exceeding the region’s needs, according to a Times analysis of federal health care data.<\/p>\n
California officials disagree with the Trump administration’s claims that they are not combating fraud. <\/p>\n
Atty. Gen. Rob Bonta last week announced the arrests in connection with the demolition of the $267 million Dharamshala.<\/p>\n
The state has closed about 280 hospices over the past two years and is investigating 300 others, according to the California Department of Public Health, which oversees hospice licensing in the state. <\/p>\n
A spokeswoman for the Centers for Medicare and Medicaid Services said this week that the federal government’s task force has suspended 447 hospices and 23 home health agencies on suspicion of fraud in the Los Angeles area since March. <\/p>\n
But those closed hospices represent just one piece of a huge industry in L.A. County. The county is home to 1,584 hospices, which is more than half of the entire state’s hospice industry as of March. According to the state’s medical facility database, there are hundreds of facilities in the Van Nuys area alone.<\/p>\n
The Valley neighborhood gained significant attention in January when Oz posted a video from a complex in Van Nuys where a temporary hospice operated.<\/p>\n
“What we’ve learned is, there’s about $3.5 billion of fraud going on in hospice and home care here in Los Angeles. It’s run by the Russian Armenian mafia. You pay attention to the letters and the language behind me,” Oz says in the video, with an unrelated lavash bakery sign visible over his right shoulder.<\/p>\n
Newsom called the allegations against the Armenian community “baseless and racist.” <\/p>\n
A few blocks away is a building well known to investigators. <\/p>\n
The 89 licensed hospices, housed in a two-story building in a small medical plaza at 14545 Friar St. in Van Nuys, billed Medicare more than $38 million in 2023, according to the latest available data from CMS. <\/p>\n
The location was a hospice run by Jessa Zayas, who was charged with six felonies by federal prosecutors and accused of embezzling $2.5 million from the federal government. He is accused of collecting signatures of people in Bakersfield retirement homes and enrolling them in hospice care who were not dying. Zayas has pleaded not guilty to four counts of health care fraud and two counts of aggravated identity theft. His lawyer did not immediately respond to a request for comment. <\/p>\n
A source familiar with the matter confirmed that federal investigators are looking into other operations on Friar Street.<\/p>\n
The building has also been in the sights of state investigators for years. There have been 56 state licensing and federal investigations into the complex since 2021, and the state has revoked 14 licenses, officials said. <\/p>\n
Last week, about 80 surveyors and investigators from multiple state agencies gathered on Friar Street to conduct a compliance review. The results of the investigation were not immediately known, but officials said 109 businesses that attempted to use the address were never issued state hospice licenses. <\/p>\n
Two days later, Bonta announced the results of a separate investigation, which identified 14 licensed hospice businesses, which he accused of fraudulently billing Medi-Cal $267 million by using stolen identities. One of the hospices was based on Friar Street.<\/p>\n
Authorities allege scammers purchased the identity information of people living outside California on the dark web and enrolled them in Covered California. According to criminal complaints, several hospice companies were purchased and began billing Medi-Cal for non-existent services using stolen identities. <\/p>\n
Authorities alleged that the defendants were able to avoid state restrictions by purchasing hospices that had existing licenses.<\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"
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