Drain the Swamp · California Hospice Fraud · May 17, 2026 · 10:30 AM ET

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The California Hospice Crackdown: 800 Sham Providers Shut Down — and the “Stop Nick Shirley Act” That Followed.

On May 13, 2026, CMS Administrator Dr. Mehmet Oz announced that the agency had suspended payments to roughly 800 hospices and home-health agencies in Los Angeles County alone — responsible for $1.4 billion in 2024 Medicare billings — and imposed a six-month nationwide moratorium on new hospice and home-health Medicare enrollments. The same day, Vice President JD Vance deferred $1.3 billion in federal Medicaid payments to California through the new Anti-Fraud Task Force.

The crackdown is real, and the numbers are large. Almost every hospice case currently in front of CMS, the DOJ, and the U.S. Attorney for the Central District of California sits inside one place: Los Angeles County. Los Angeles County alone has roughly 1,800 hospices— more than 36 entire states combined and 33 times as many as Florida. That is the story.

This is the story of a regulatory failure under Governor Gavin Newsom (D-CA) — whose California Department of Public Health has not finalized the emergency hospice-licensing regulations a 2022 state law required four years ago — and of a federal enforcement machine now picking up what a generation of state regulators missed. It is also the story of the patients who paid for it: denied dialysis, denied mammograms, denied transplants, enrolled in “hospice” they never elected and could not opt out of. And it is the story of AB 2624— the “Stop Nick Shirley Act” — the California Assembly’s answer to the YouTuber who pried the lid off.

• 800California hospices and home-health agencies suspended from Medicare in Los Angeles County alone — CMS Administrator Mehmet Oz, May 13, 2026
• $1.4Bin 2024 Medicare billings by those 800 suspended providers — CMS
• $1.3Bin federal Medicaid payments to California deferred by the Vance Anti-Fraud Task Force, May 13, 2026
• 1,800hospices in LA County — more than 36 entire states combined and 33 times as many as Florida
• 280+California hospice licenses revoked since 2024, with 300 more providers under investigation and 284 arrests — Newsom's office
• $267Min Medi-Cal identity-theft fraud charged in Operation Skip Trace — 21 defendants, 14 sham hospices, AG Bonta (D), April 9, 2026
• 4 yearssince California passed AB 2673 mandating CDPH finalize emergency hospice-licensing regulations — still unfinished
• 42.8MX views on Nick Shirley's March 16, 2026 undercover-hospice video — the catalyst for the federal action and the California legislature's AB 2624 response

CMS Administrator Dr. Mehmet Ozannounced on May 13, 2026 that the agency had suspended payments to “approximately 800 hospices and HHAs suspected of fraud in Los Angeles alone that were responsible for $1.4 billion in Medicare spending last year, with $70 million in suspended funds thus far.” Fox News had earlier reported the figures as 773 hospices plus 23 home-health agencies, totaling 796. California has revoked more than 280 hospice licenses in the past two years and has another 300 providers under investigation, with 284 arrests, per Governor Newsom’s office.

The concentration is the story. Los Angeles County alone houses roughly 1,800 hospices — more than 36 entire states combined, and 33 times as many as Florida. The county saw a 1,500% increasein hospice agencies between 2010 and 2022. A 2022 California State Auditor report (Michael Tilden) flatly concluded: “The state’s weak controls have created the opportunity for large-scale fraud and abuse.”

“Eighteen LA hospices billed nearly $600 million in 76,000 claims between 2021 and 2024 using a single doctor's Medicare provider number. The typical LA-County hospice billed Medicare roughly $29,000 per patient, against a national average of $13,200.”

Federal hospice billing data · 2021-2024

One of the easiest ways to mislead a reader on a fraud story is to mix four categories of dollar figure that mean very different things. We try not to. The breakdown:

Adjudicated and charged losses across California and federal cases — $267M Operation Skip Trace, the $50M April 2026 takedown, the $16M Fichidzhyan ring, and the Canales Inland Empire case — total in the low hundreds of millions. The CMS Administrator’s $3.5 billion figure for LA-area hospice and home care fraud is an agency estimate from public remarks, not a court-tested loss. The $1.4 billionis 2024 Medicare billings by the 800 suspended providers — billing volume under review, not proven fraud.

Hospice is the Medicare end-of-life benefit: when a patient with a prognosis of six months or less elects hospice, Medicare pays the provider a per-diem — the FY 2026 base routine-home-care rate is $231 a day for the first 60 days, per MedPAC — and covers all care related to the terminal illness, with an annual per-beneficiary cap of $34,465.34for FY 2025. Because the per-diem flows whether or not meaningful care is delivered, and because “terminally ill” is a subjective clinical judgment, hospice is one of the most fraud-prone corners of Medicare. The schemes federal and California prosecutors have documented fall into a half-dozen recurring patterns:

“How do you put a hospice in a burrito stand in California? How do you put a hospice in a tire store in California?”

Sheila Clark · President & CEO, California Hospice and Palliative Care Association · House Ways and Means · April 21, 2026

The 2022 California State Auditor report concluded that “the state’s weak controls have created the opportunity for large-scale fraud and abuse.” Since 2015, the California Department of Public Health had never suspended a hospice license and had revoked exactly one. Los Angeles County saw a 1,500% increase in hospice agencies between 2010 and 2022, ending with more hospices than 36 entire states and 33 times as many as Florida.

AG Bonta called the situation “an epidemic.” After a 2021 Los Angeles Times investigation, the legislature passed SB 664 and AB 1280 — signed by Newsom October 4, 2021 — imposing a state moratorium on new hospice licenses effective January 1, 2022, and banning kickbacks for patient referrals. AB 2673 (2022) extended the moratorium until CDPH adopts emergency licensing regulations and barred sales of hospice licenses within 60 months of issuance (exceeding the federal 36-month rule). Four years later, those CDPH emergency regulations still are not finalized.

“The state's weak controls have created the opportunity for large-scale fraud and abuse.”

California State Auditor Michael Tilden · Report 2021-123 · March 2022

CMS Administrator Oz has publicly attributed much of the LA-area scheme to organized crime. In a January 26, 2026video filmed in Van Nuys, Oz said: “There are 42 hospices in this four-block area … There is roughly $3.5 billion of fraud taking place here in Los Angeles in hospice and home care. It’s run, quite a bit of it, by the Russian-Armenian mafia.” Governor Newsom’s office filed a civil-rights complaint accusing Oz of “baseless and racially charged allegations” against the Armenian-American community; the Armenian Bar Association said the comments risked “ethnic profiling.” A May 2025 DOJ Health Care Fraud Strike Force takedown did, however, explicitly dismantle five LA-area hospices tied to a multi-year investigation of Armenian organized crime. A spokesperson for the U.S. Attorney’s office for the Central District of California told KFF Health News the office does not track whether hospice fraud defendants are alleged to be foreign nationals.

One of the reasons the California hospice scandal broke into the national consciousness in March 2026 was not a federal indictment, a CMS press release, or a legislative hearing. It was a 40-minute video posted to X by an independent journalist.

On March 16, 2026, YouTuber and citizen journalist Nick Shirley posted a video in which he knocked on the doors of registered hospices in Southern California, walked into empty storefronts billing Medicare, and put faces on the “burrito stand and tire store” problem Sheila Clark would later describe to Congress. He alleged roughly $170 million in fraud at the locations he documented and reported that California hospice enrollment had risen by about 1,000% in recent years. The video racked up 42.8 million views. Three days later, CBS News followed with a similar on-camera investigation.

“California is trying to pass a bill that would criminalize investigative journalism with misdemeanors, $10,000 fines, imprisonment, and content takedown.”

Nick Shirley · on AB 2624 · 2026

The Sacramento response was not, in the first instance, “let’s finish the four-year-overdue CDPH licensing regulations.’’ It was a bill.

Assembly Bill 2624, titled “Privacy for immigration support services providers,’’ was introduced on February 20, 2026 by Assemblymember Mia Bonta (D-Oakland) — the wife of Attorney General Rob Bonta (D), whose office is simultaneously prosecuting Operation Skip Trace. The bill was amended on April 9, 2026. As amended, it creates privacy protections for “immigration support services providers’’ — concealing their business addresses and imposing penalties on those who publish their image on social media, with misdemeanor charges and fines up to $10,000.

Critics from both sides of the journalism world — including Assemblymember Carl DeMaio (R-San Diego), who dubbed the legislation the “Stop Nick Shirley Act’’— argue the privacy-of-immigration-service-providers framing is a cover. The reachable conduct in the bill, they say, sweeps in undercover door-knocking videos of taxpayer-funded providers, which is exactly what Shirley did at hospices and what others have done at daycare and home-health agencies that have been the subject of fraud allegations.

“Citizens have every right to document and report on taxpayer-funded providers. AB 2624 is an attack on the First Amendment and a shield for the very fraud California has refused to police itself.”

Assemblymember Carl DeMaio (R-San Diego) · on AB 2624 · 2026

The Governor’s press office did not pass the moment quietly either. Newsom’s communications team posted an AI-generated meme depicting Shirley as a predator lurking outside a daycare with cameras, captioned in a way widely interpreted as accusing the journalist of pedophilia. The post drew immediate condemnation from free-press groups and from California Republican legislators, who pointed out that the administration’s personal smear arrived before CDPH had finished the four-year-overdue licensing regulations.

The sequence is the story in miniature: a 40-million-view exposé of state-licensed Medicare fraud by an outsider; a state-legislature bill in response that critics say will criminalize the next 40-million-view exposé; and a Governor’s-office attack post on the messenger personally. All of this while the regulators charged with fixing the hospice licensing system in the first place still have not.

The human harm is well documented and is the strongest argument for aggressive enforcement. ProPublica reported that “unwitting recruits have been denied kidney dialysis, mammograms, coverage for lifesaving medications, or a place on the waiting list for a liver transplant,” because hospice enrollment legally revokes a patient’s right to curative Medicare benefits.

“I was locked out of receiving any medical care because I had been falsely classified as a hospice patient. It was not just frustrating; it was terrifying.”

Lynn Ianni · California psychotherapist · Congressional testimony · April 21, 2026

Ianni discovered she was “enrolled” in hospice only when Medicare denied a physical-therapy claim after a pickleball injury. Her surgeon’s billing number was also stolen. She lost more than six months of Medicare coverage. Sheila Clark told Congress about a Southern California woman who fell at night going to the bathroom, needed cataract surgery, discovered her records showed her enrolled in hospice she had never elected, and died of her injuries two months later.

“There is five months worth of mail stacked up from CMS, and nobody's there, and that passed a survey.”

Sheila Clark · CHAPCA CEO · House Ways and Means · April 21, 2026

The fraud also damages legitimate hospice providers. Real nonprofit hospices in California must compete in a saturated market against bad actors who outbid them for referrals through kickbacks. According to MedPAC’s March 2024 Report to Congress, only 11% of U.S. hospices earned a 5-star quality rating, while 12% received 2 stars and 2% received 1 star.

“Small fly-by-night hospices aren't required to publicly report quality of care data, are often not audited, and, because of how the per diem is set up, it's a gold mine. You could very quickly figure out whether a hospice is a real place or a mill that's simply signing up and burning through patients to bill Medicare. But no one is really doing that.”

Larry Atkins · National Partnership for Healthcare and Hospice Innovation · to ProPublica

“One of the poster children for fraud and abuse in Medicare.”

David Grabowski · Harvard health-policy professor · MedPAC commissioner · on hospice fraud

President Donald Trump and Vice President JD Vance have posted repeatedly on the California hospice crackdown. Two representative posts on Truth Social, paraphrased:

Three honest qualifications on this story, because the editorial mission requires them: