Oversight Committee Launches Investigation Into Rampant Taxpayer Fraud in California Hospice Programs

Request all documents and communications from Governor Gavin Newsom regarding California's efforts to detect and prevent fraud

WASHINGTON-Following alarming reports that California officials failed to properly safeguard federal funds, House Committee on Oversight and Government Reform Committee Chairman James Comer (R-Ky.) and Oversight Committee Republicans today launched an investigation into rampant taxpayer fraud in California's hospice programs. In a letter to California Governor Gavin Newsom, the lawmakers emphasized that the Newsom administration has been aware of state audit reports of hospice fraud for at least four years but has failed to prevent or detect it and has enabled hospice providers to defraud the American taxpayer and exploit vulnerable patients. The Oversight Committee is now requesting documents and communications regarding California's oversight and internal controls to detect and prevent fraud for its federally funded hospice programs.

"Recent reporting has revealed alarming evidence of fraudulent activity in California's hospice programs, including agencies overbilling Medicare and fraudulently enrolling beneficiaries without their knowledge. In California, your administration's Departments of Public Health, Social Services and Health Care Services all have a role in overseeing federally funded hospice programs. The Committee is concerned your administration does not have sufficient internal controls to prevent and detect fraud and is not conducting proper oversight of these hospice programs. As a result, Americans across the country are paying for California's rampant hospice fraud and vulnerable patients are being exploited. California has a well-documented history of fraud in its hospice programs. Your administration has been aware of credible reports of hospice fraud for at least four years. Despite these red flags, it appears California has enabled hospice providers to defraud the American taxpayer and exploit vulnerable patients," wrote the Republican lawmakers.

The Committee's investigation into Minnesota's federally funded social service programs exposed widespread failures by state agencies to conduct oversight and prevent fraud, with similar schemes now appearing in California's hospice programs. According to a March 29, 2022, report from the California State Auditor, Los Angeles County has seen a 1,500 percent increase in hospice providers since 2010, with providers overbilling Medicare by at least $105 million in a single year. In addition, a whistleblower reported that California has minimal safeguards to prevent fraudsters from obtaining hospice licenses, including allowing individuals living abroad to secure them, and described schemes in which fraudsters recruit seniors. The Centers for Medicare and Medicaid Services recently estimated that Los Angeles County alonerepresents $3.5 billion in hospice fraud, and that 18 percent of all hospice billing in the United States comes from this single county.

"Last year, California Attorney General Rob Bonta called hospice fraud in California, specifically in Los Angeles County, 'an epidemic.' The March 2022 audit report highlighted several red flags and key warning signs of fraud: many providers are listed at the same address; very low patient counts compared with the rest of the State; patients listed as terminally ill were later discharged alive; excessive billing for services that may not have been provided; and staff were shared across multiple hospice providers. The Committee is requesting documents and communications regarding California's oversight and internal controls to detect and prevent fraud for its federally funded hospice programs," continued the Republican lawmakers.

Read the letter to Governor Newsom here.