1. Scale of the Fraud

• Authorities uncovered a large‑scale hospice fraud scheme totaling approximately $267 million.
• The investigation, referred to as Operation Skip Trace, led to 21 individuals being charged, with multiple arrests already made.
• At least 14 fraudulent hospice companies were used, and investigators later identified over 130 associated shell companies.

2. How the Scheme Worked

• No legitimate hospice services were provided to patients — billing was entirely fraudulent.
• Fraudsters:
  • Purchased or obtained stolen personal identities, sometimes from the dark web.
  • Enrolled fake or non‑terminal patients into hospice care programs.
  • Submitted false claims to Medi‑Cal (California Medicaid) and Medicare.
• Some patients were real people but were not terminally ill or receiving hospice care.
• Patients sometimes received small kickbacks, while operators kept the majority of the funds.

3. Licensing and Oversight Failures

• Suspects exploited weak hospice licensing and vetting systems in California.
• Once a hospice license was obtained, operators could bill federal programs with minimal upfront verification.
• Investigators and federal officials criticized California for:
  • Insufficient identity verification
  • Lack of proactive fraud detection
  • Allowing money to be paid out before validation

4. Financial Impact and Recovery

• Only about $30 million of the $267 million was recovered at the time of reporting.
• Much of the stolen money was allegedly:
  • Spent on luxury assets (cars, homes, travel)
  • Moved through shell companies
  • Transferred overseas
• Recovery is difficult once funds leave the system or country.

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