The Auditor Screamed.
Newsom Looked Away.
Four Years Later, Trump Cleaned It Up.
In March 2022, California’s own State Auditor handed Governor Gavin Newsom a documented warning: Los Angeles had become the hospice fraud capital of the world, with 1,841 fake or suspicious agencies billing Medi-Cal for patients who didn’t exist, identities that were stolen, and services that were never rendered. He did almost nothing. Four years and hundreds of millions in stolen taxpayer dollars later, the Trump administration stepped in to do the job.
New York has 41. Florida has 46. Los Angeles has 1,841.
To understand what happened in California, start with a number that should not be possible. As of January 2022, Los Angeles County had 1,841 licensed hospice agencies — more than the entire states of New York (41) and Florida (46) combined. Eighteen percent of all hospice billing in the United States flows through a single American county.
The number didn’t get there overnight. Between 2010 and 2022, the hospice industry in Los Angeles County grew by 1,500 percent. That is not a typo. In the same period, California statewide received 3,500 new hospice licensing applications — 2,600 of them, or 75 percent, for Los Angeles County alone. Fraudsters had discovered something: Medi-Cal hospice billing was easy money with almost no enforcement.
The California State Auditor’s 2022 report documented what this looked like on the ground. In Van Nuys, 210 active hospice agencies operated within one mile of each other. At a single commercial address — Merabi Plaza — 89 hospice agencies were registered. Seventy-two of those 89 displayed at least three of six official fraud warning signs. One individual was simultaneously registered as administrator for 27 different hospice agencies. Another 30 administrators each managed six or more agencies. Twenty-eight of those 31 were in Los Angeles County.
“Large-scale fraud and abuse.” In writing. To the governor.
On March 29, 2022, the California State Auditor published Report 2021-123: “Hospice Licensure and Oversight.” The language was not bureaucratic hedging. The auditor wrote that “weak state oversight created opportunities for large-scale fraud and abuse” in hospice agencies. The report documented $105 million overbilled to Medicare in Los Angeles County in a single year (2019) and at least $3.1 million overbilled to Medi-Cal in the same period — and those were only the amounts the auditor could document from available records, not a complete accounting of the fraud.
The auditor’s specific recommendations included creating a statewide multi-agency task force, strengthening the license application review process, and prioritizing investigation of existing providers displaying fraud indicators. The report was addressed, as all auditor reports are, to the Governor of California and the Legislature. At that time: Governor Gavin Newsom (D).
Newsom had already signed Senate Bill 664 in October 2021 — a moratorium on new hospice license applications. It was a partial measure that sounded decisive and accomplished almost nothing: it stopped new fraudsters from entering the market while leaving nearly 2,000 already-operating suspicious providers completely untouched. After the March 2022 auditor’s warning, no additional legislation followed. No criminal referrals were sent to federal prosecutors. No emergency multi-agency task force was formed.
“Weak state oversight created opportunities for large-scale fraud and abuse.”
California State Auditor Report 2021-123 — Addressed to Governor Gavin Newsom (D) — March 29, 2022
They billed for people who didn’t exist.
Operation Skip Trace — the largest single hospice fraud case in California history, charged in April 2026 — did not involve poor care, billing errors, or even medical record falsification. It was simpler and more brazen than that. Twenty-one defendants purchased personal identifying information for non-California residents off the dark web, enrolled those stolen identities in Medi-Cal through Covered California, purchased 14 hospice companies through straw owners, and billed those companies for hospice services for the stolen identities. The patients did not exist. The offices were shells. The services were never rendered. Not once. The operation laundered the proceeds through 130 shell companies and cryptocurrency. $267 million billed.
A second concurrent federal operation — Operation Never Say Die — uncovered a different but related scheme: recruiters paying healthy Medicare and Medi-Cal beneficiaries $300 per month in cash plus free vitamins to pose as terminally ill patients and enroll in hospice programs. Fifteen defendants across nine separate investigations were charged, including doctors, nurses, and a psychologist. One defendant operated three fraudulent hospice companies while incarcerated in federal prison. Federal prosecutors called California a “kingdom of fraud.”
These were not small operations that slipped past enforcement. The California State Auditor had already documented the exact fraud indicators in 2022: multiple agencies at the same address, shared administrators across dozens of companies, patients listed as terminally ill who later walked out of hospice alive, and billing for services with no documentation. The playbook was known. The players were visible. The state chose not to look.
He knew in 2022. He was still governor in 2026.
Los Angeles County goes from a normal number of hospice providers to 1,841 — more than New York and Florida combined. Fraudulent operators discover that Medi-Cal hospice billing is a near-frictionless cash machine: minimal oversight, easy enrollment, and a terminally ill patient demographic unlikely to complain.
Following a Los Angeles Times investigation, Governor Newsom signs Senate Bill 664, halting new hospice license applications unless applicants can demonstrate 'demonstrable need.' The bill is narrow by design: it does nothing about the nearly 2,000 suspicious providers already operating. The thousands of existing fraudulent agencies are left untouched.
The California State Auditor releases Report 2021-123. It is unambiguous: 'weak state oversight created opportunities for large-scale fraud and abuse.' The report documents a single individual registered as administrator for 27 different hospice agencies simultaneously; 210 agencies within one mile of each other in Van Nuys; 72 of 89 agencies in a single office plaza triggering multiple fraud warning signs. The report goes directly to Governor Newsom.
After the auditor's warning, no additional state legislation is passed. No criminal referrals are made to federal prosecutors. The California Department of Health Care Services conducts reactive enforcement — revoking licenses only after fraud is proven — while thousands of flagged providers continue billing Medi-Cal. The fraud metastasizes into sophisticated transnational identity-theft rings.
House Oversight Committee Chairman James Comer and 24 Republican members send a formal letter to Governor Newsom, stating that his administration 'failed to prevent or detect' the fraud and 'enabled hospice providers to defraud the American taxpayer.' The letter requests all related documents by April 6, 2026.
The day after the House Oversight letter, Newsom's office publishes a statement claiming California 'has been cracking down on hospice fraud for years.' He cites the 280+ license revocations as proof of action — the same licenses that should have been revoked years earlier based on the 2022 auditor's own documented warning signs.
The Trump administration's Task Force to Eliminate Fraud, led by Vice President JD Vance, suspends 447 hospice providers and 23 home health agencies in the Los Angeles area. Over $600 million in payments are suspended pending investigation. Federal prosecutors launch Operation Never Say Die — 15 defendants across 9 separate investigations for $60+ million in fraud — days after Operation Skip Trace charges 21 defendants in a $267 million identity-theft fraud ring.
447 providers suspended. $600 million frozen.
In March 2026, President Trump issued an executive order establishing the Task Force to Eliminate Fraud, with Vice President JD Vance as lead and ten federal agencies as participants. Its first major action targeted California. In April 2026, the task force suspended 447 hospice providers and 23 home health agencies in the Los Angeles area, freezing over $600 millionin Medi-Cal and Medicare payments pending investigation. Federal prosecutors announced they expected “clusters of similar takedowns every few months” and designated California the highest priority in the nation.
The California Attorney General — appointed by a Democratic administration — participated in Operation Skip Trace, announcing 21 defendants and the $267 million fraud ring on April 8–9, 2026. Attorney General Rob Bonta touted 294 hospice investigations, 119 criminal cases filed, and 51 convictions over his tenure. The Newsom administration immediately claimed credit, characterizing these enforcement actions as evidence of years of diligent work.
What they did not address: the 2022 State Auditor report had identified the specific fraud indicators present in these exact cases. The administrators, the address clustering, the shared staffing, the ineligible patient billing — all of it was documented and warned about four years before the arrests were made.
Congress wants answers. Newsom posted a tweet.
On March 23, 2026 — the same week the Trump enforcement actions went public — House Oversight Committee Chairman James Comer and 24 Republican members sent a formal letter to Governor Newsom, stating that his administration had “failed to prevent or detect” the fraud and “enabled hospice providers to defraud the American taxpayer.” The letter requested all documents related to hospice oversight by April 6, 2026.
Newsom’s office responded the next day — not with documents, but with a press release headlined “News You Won’t See on Fox News.” The statement listed 280+ license revocations and the moratorium on new licenses as proof of aggressive action. It did not mention the 2022 State Auditor warning. It did not mention the four-year enforcement gap. It did not explain why the specific fraud indicators identified by the auditor in 2022 — the same address clustering, the same administrator stacking — were still present in the 2026 indictments.
The CMS has placed California, Arizona, Nevada, and Texas on enhanced monitoring lists for hospice fraud. Federal auditors estimate $3.5 billionin Los Angeles County hospice claims are currently under fraud review — a figure CMS itself cautions is not all confirmed fraud, but represents the scale of what investigators are examining. The full accounting of what was stolen during Newsom’s watch will take years to complete.
“California has been cracking down on hospice fraud for years.”
Governor Gavin Newsom (D-CA) — Statement, March 24, 2026 — Two years after the 2022 State Auditor warned of 'large-scale fraud and abuse'
- ▸California’s own State Auditor warned Governor Newsom in writing on March 29, 2022 that Los Angeles had become a hospice fraud hub with “large-scale fraud and abuse” and documented $105M in Medicare overbilling in a single year.
- ▸Newsom’s response was a narrow moratorium on new licenses. No state criminal task force was formed. No criminal referrals went to federal prosecutors. Existing fraudulent operators continued billing for four more years.
- ▸In April 2026, the Trump administration’s fraud task force suspended 447 providers, froze $600M+ in payments, and charged 21 defendants in a $267M identity-theft fraud ring where not a single legitimate hospice service was ever provided.
- ▸$3.5 billion in Los Angeles County hospice claims are now under federal fraud review. The final tally of what was stolen during Newsom’s four years of inaction is not yet known.