Dr. Mehmet Oz, chief of the U.S. Centers for Medicare & Medicaid Services, recently accused foreign gangsters from Russia and Armenia of setting up bogus hospice businesses in California, cutting in corrupt doctors, and treating tricked or compromised patients as part of an “organized crime mafia deal.”

Oz posted a video on Jan. 26 suggesting that Russian-Armenian gangs may be behind the hospice fraud that has cropped up primarily in Los Angeles.

“A lot of it’s driven by foreigners who came to Los Angeles — very different culture, Russian-Armenian groups — and this mafia seems to have taken over the system,” Oz said in the footage.

In response, Gov. Gavin Newsom (D-CA) filed a civil rights complaint claiming that Oz made “baseless and racist allegations” against Armenian Americans in California, reflecting “discriminatory animus” directed toward them.

NEWSOM HITS DR. OZ WITH CIVIL RIGHTS COMPLAINT OVER ARMENIAN HOSPICE FRAUD ALLEGATIONS

As proof of foreign influence, Oz referred to a California criminal case involving a yearslong Medicare money-laundering scheme that stole $16 million in hospice proceeds.

Fraudsters convicted in June 2025 for their involvement were identified by federal authorities as belonging to a ring of “foreign nationals” operating multiple fake hospice companies and submitting false claims for services that were either never provided or medically unnecessary.

According to a Center Square analysis of California Social Services data, Armenians in Los Angeles County appeared to use the state’s in-home care program at roughly 700% of their population share, equaling 14.7% of recipients versus 2.1% of the population.

California fraught with hospice fraud for years

“We have witnessed a sevenfold increase in hospice in L.A. County. Sevenfold. That doesn’t happen naturally,” Oz said, adding, “There are not seven times more deaths in L.A. County than there were five years ago.”

Recent allegations aside, California has a well-documented history of hospice fraud dating back several years, with Attorney General Rob Bonta (D-CA) saying it rises to the level of an “epidemic.”

In 2022, the California State Auditor’s Office warned of sham hospice operations in Los Angeles likely defrauding Medicare on a massive scale. At the time, officials surmised that hospice fraudsters collectively overbilled the government by $105 million in 2019.

According to the state auditor, a slew of indicators “strongly suggest that a network or networks of individual perpetrators in Los Angeles County are engaging in a large and organized effort to defraud the Medicare and Medi-Cal hospice programs.”

In a lengthy report, acting California State Auditor Michael Tilden cited unusually long durations of hospice care, high rates of hospice patients discharged alive, and “excessive geographic clustering” of supposed brick-and-mortar hospices.

Location	Live Discharge Rate	Average Duration of Services (in days)	Average Total Amount Paid (per patient)
Burbank, Los Angeles County	31%	104	$17,300
Glendale, Los Angeles County	32%	89	$15,100
North Hollywood, Los Angeles County	45%	110	$19,300
Van Nuys, Los Angeles County	51%	102	$17,000
TOTAL—California, excluding Los Angeles County	14%	78	$13,200
TOTAL—National	11%	76	$13,200

Investigators in one case detected 210 active hospice agencies “suspiciously” clustered together within a mile of each other in Van Nuys, a Los Angeles neighborhood.

Sometimes, dozens of separately licensed agencies were colocated in the same facility. A single office building was listed as the address of 150-plus licensed hospice and home health agencies, which appeared to surpass the site’s physical capacity.

When inspectors visited these locations, they observed unopened mail piling up on the floor of certain business suites, many hospice providers not listed on the building directories, agency names appearing on paper signs taped to suite doors, and the purported office doors of hospice agencies bearing no signage at all.

Oz visited Van Nuys himself, claiming to find fraudulent activity amounting to $3.5 billion among 42 hospices within a four-block radius.

“So either there are a lot of people dying here, or you’ve got fraudulent activity that is so good that everyone wants to get in on it,” Oz said while walking the streets of Van Nuys.

Oz reiterated, “It’s run, quite a bit of it, by the Russian-Armenian mafia,” as he showed stretches of medical buildings with Cyrillic writing on their façades.

The 2022 state audit found that hospice agencies ballooned by 1,600% over a 10-year period, faulting the California Public Health Department’s “lax” licensing process, in particular, for enabling the proliferation of fraudulent providers, even to the extent that the department did not deny license applications in instances where its own staff raised red flags.

“The state’s weak controls have created the opportunity for large-scale fraud and abuse,” Tilden wrote.

CALIFORNIA HAS ALLOWED WIDESPREAD MEDICARE FRAUD, HOUSE REPUBLICANS SAY

Tilden also pointed to the health department’s “inadequate” oversight of hospices once they were licensed, including negligence, such as failing to monitor who manages an agency and when management changes hands.

As an evasion strategy, owners of hospices involved in Medicare schemes often “license flip,” selling their licenses soon after acquiring them or before regulators can take action against alleged malfeasance.

Some scammers seek licensure of hospice agencies with the sole intention of selling them to the highest bidder. The state auditor discovered online listings auctioning off “brand new, never billed” hospice agencies for large sums of money while promising high cash flow and profits within a few months.

The state’s suspect senior care statistics

California currently has more than 5,600 hospice centers, the highest total out of all U.S. states, accounting for 30% of the entire country’s hospice industry, according to a national registry of healthcare providers.

However, the state’s hospice numbers do not seem to match the actual demand there, given age demographics.

In response to the resurfaced hospice fraud revelations, the Senate Special Committee on Aging, which studies Medicare trends, reported that Los Angeles County alone has hundreds of thousands of fewer seniors than Florida, a retirement hub, yet more than 30 times as many taxpayer-funded hospice providers.

Indeed, in 2021, the California county contained around 1,800 hospice agencies, up significantly from 109 hospice care centers in 2010. By comparison, that count far outnumbered Florida’s per capita rate when factoring in their respective old-age populations.

Florida, unlike California, has a “certificate of need” law that requires hospice agencies to demonstrate an unmet need for services in the area where they wish to operate.

As of 2022, an overwhelming majority, 94%, of hospice agencies in California are for-profit companies, more than any other state. Medicare pays for the bulk of hospice services in California, while Medi-Cal, the state’s Medicaid program, covers much of the difference.

‘A full-blown home health crisis’

Sen. Rick Scott (R-FL), chairman of the special aging committee, attributed the rapid, disproportionate emergence of hospice operators in Los Angeles County to scammers who sought to raid the Medicare trust fund, which finances the government insurance program.

The trust fund is on track to run out of money in the next decade. Officials estimate that Medicare reserves will be depleted by 2033, three years earlier than previously projected, according to the 2025 trustees report. The annual report found that Medicare expenditures for inpatient hospital and hospice services in 2024 exceeded what the trustees had anticipated, worsening the deficit and resulting in the earlier-than-expected depletion date.

To combat fraud, CMS under the Biden administration imposed indiscriminate payment cuts, arbitrarily clawing back reimbursement rates for physicians across the board. According to the GOP-led Senate Special Aging Committee, this created “a full-blown home health crisis.”

Senate Republicans say that instead of cracking down on fraud concentrated in California, the Biden administration’s CMS financially punished honest home health providers, forcing approximately 1 in 4 agencies to close their doors.

‘CALIFRAUDIA’ REPORT PUTS STATE FRAUD, WASTE, AND ABUSE LOSSES AT $250 BILLION

Home health deserts popped up as a result, particularly in rural and remote areas. Dubbed the “fraud tax” by critics, the payment cuts ended up pushing seniors, who wished to receive care in the comfort of their own homes, into costly institutions.

Scott informed Oz in the fall of 2025 that all of Florida’s counties had suffered reductions in the home health sector, leaving many senior citizens with fewer options for cost-effective care.

In an October letter addressed to the CMS administrator, Scott noted that unlike Los Angeles County, where home healthcare usage has remained at a steady rate of 14% despite doubling its numbers during President Joe Biden’s tenure, his home state of Florida has seen Medicare utilization drop to 8% overall, marking a 26% decline.

Between 2019 and 2023, the number of home health agencies in the United States decreased 6%, but HHAs skyrocketed 46% in Los Angeles County during that period. More than 1,400 new Los Angeles County HHAs enrolled in Medicare in the last five years, comprising over half of California’s HHAs and about 14% of all HHAs in the U.S.

The inordinate volume of HHAs in Los Angeles County was also mentioned by the Medicare Payment Advisory Commission in its March 2025 report to Congress. 

Per MedPAC, the number of HHAs participating in the Medicare program swelled by 3.4% in 2023, an uptick “due almost entirely to growth in the number of HHAs in Los Angeles County.” Excluding this county, the number of participating HHAs actually dipped by 2.8%.

The toll on America’s senior citizens

Widespread hospice fraud causes higher healthcare costs for senior citizens across the country by stealing billions of dollars from Medicare, a type of taxpayer theft that shifts financial burdens onto other elderly beneficiaries dependent on the safety net system.

Medicare’s fee-for-service model can incentivize providers to perform frivolous tests, procedures, and use unneeded medical equipment, with the intent to siphon off federal funds.

In effect, taxpayers subsidize these criminal actors, exploiting the program that, in turn, pays for overinflated or forged reimbursement claims.

HOW MINNESOTA’S SOMALI FRAUD INDUSTRIAL COMPLEX HAS STOLEN MILLIONS FROM MEDICAID

In the case of hospice fraud, through fraudulent billing for unnecessary end-of-life services, “upcoding” charges, and enrolling ineligible patients who do not truly have a limited life expectancy prognosis of six months or less, rampant abuse of the publicly funded Medicare program restricts the terminally ill’s access to affordable, high-quality compassionate care.

Such scams drive up Part B premiums, increase out-of-pocket insurance expenses, drain taxpayer resources that could otherwise support legitimate senior services, and ultimately hamper quality of care for dying beneficiaries elsewhere.

Fixing the fraud crisis

Some industry watchdogs, citing successful past responses to fraud and waste in other states, want CMS to temporarily freeze the Medicare enrollment of prospective service providers in California as a course correction, mitigating the state’s boom of pop-up healthcare centers until more integrity measures can be put in place.

In 2013, CMS imposed a moratorium on new home health agencies in Florida, Illinois, Michigan, and Texas seeking Medicare certification. The moratoria were lifted six years later after adequate fraud-prevention safeguards were implemented.

California did so too in 2022 and extended the statewide moratorium several times. However, its suspension simply paused the state’s hospice licensing process, with exceptions carved out for change-of-ownership applicants who meet certain criteria.

Newsom, after Oz started narrowing in on hospice fraud in California, issued a press release announcing that over 280 licenses had been revoked from new hospice operators in the past two years.

Others are urging CMS to adopt advanced fraud-detection tools, such as artificial intelligence, machine learning, and automated anomaly triggers, that could identify improper payments and data outliers in real time.

In November, CMS launched a new initiative, dubbed the Fraud Tax Project, designed to uncover both fraudulent billing practices and tax evasion tactics used by hospice scammers.

“Pursuing tax fraud cases provides state authorities with a faster, more direct path to enforcement than traditional health care fraud prosecutions,” Oz said in a memo sent to all 50 states, offering a partnership between federal and local authorities.

“In many instances,” Oz said, “criminal tax fraud convictions allow CMS to swiftly revoke billing privileges, cutting off fraudulent billing activity and preventing future losses.”

The project will allow CMS to work with state tax agencies to pinpoint patterns of tax evasion indicative of fraudulent activity. Operators of healthcare agencies who falsify Medicare claims often also fail to report that income on their tax returns, committing what CMS calls a “dual-layered crime.”