Phantom Care, Real Theft: California’s Medicaid Fraud Is Not a Surprise

The California state auditor flagged it in 2022. CBS News documented it in detail. Congressional committees sent letters. Federal prosecutors secured prison sentences. And then a 23-year-old in a hoodie posted a 40-minute video on X, and suddenly nine million people knew what the government had filed away and forgotten. Citizen journalism strikes again.

Independent journalist Nick Shirley‘s March 2026 investigation into Los Angeles County hospice fraud went viral within 48 hours, drew a mocking AI-generated meme from Governor Gavin Newsom’s press office, and reopened a scandal that California officials had spent years quietly hiding behind closed doors. Shirley estimates $170 million in Medi-Cal hospice fraud. His methodology is contested, a University of Minnesota media law professor told NPR that influencer journalists “have a narrative, and they do everything they can to advance that narrative.” Some of that criticism may be fair, but the underlying data, is not Shirley’s. It belongs to California’s own auditors.

A 2022 California State Auditor report documented a 1,500 percent surge in hospice agencies in Los Angeles County since 2010, a density more than six times the national average relative to the county’s elderly population. By 2019, those agencies had likely overbilled Medicare by $105 million in a single year. That report was filed away and left to collect dust.

A 2026 CBS News investigation found that of roughly 1,800 hospice providers operating in Los Angeles County, 742 of them, about 42%, showed multiple state-defined indicators of fraud. Eighty-nine companies were registered to a single building on Van Nuys Boulevard in the San Fernando Valley. 72 of those companies showed multiple fraud markers. When CBS reporters attempted to contact 56 agencies flagged with five or more red flags, most phone lines were disconnected, routed to full voicemail, or redirected to text numbers that did not work. These are not small red flags. These are open flames burning in plain sight.

The HHS OIG estimated suspected hospice fraud at $198.1 million nationally in FY2023. CMS Administrator Mehmet Oz has cited roughly $3.5 billion in combined hospice and home health billing irregularities in Los Angeles County alone, though his agency clarified that figure covers all billing in those categories, not just confirmed fraud. Even discounting generously for legitimate claims, what remains is a number that should produce a sense of urgency, not task forces and press releases. The DOJ’s Health Care Fraud Strike Force did sentence four California residents to federal prison in 2025 for defrauding Medicare of nearly $16 million through sham hospice companies, with one defendant receiving a 12 year sentence. Prosecutions like these confirm the problem is real. They also confirm how slowly the system responds to it.

When Shirley’s video broke, Newsom’s office immediately responded with a meme. Not a rebuttal or denial. Not counter data. His spokesperson then reminded Fox News that the governor “signed a law banning ALL new hospice licenses in 2021” and launched a multi-agency task force. Newsweek reported that California has since revoked more than 280 hospice licenses and flagged 300 more for review. We will give the administration some credit for that, but a moratorium on new licenses does not address the 1,800 already operating, 742 of which CBS News found exhibiting multiple fraud indicators. Closing the refrigerator door after the food is spoiled is not a good solution. It is purely political cover.

California ranked fourth nationally in Medicaid fraud recoveries per enrollee in 2024. Newsom’s press team mentions this often. What they don’t mention is that the state auditor’s report that identified this problem four years ago. It took a YouTuber with nine million viewers to make it impossible to ignore. The audit record was very clear. The political will to act on it was missing.

California is only the largest instance of a national pattern. Maine’s January 2026 OIG audit reviewed 100 randomly sampled autism rehabilitative services claims and found improper payments in all 100, a perfect 100% deficiency rate, $45.6 million improper out of $76.7 million audited. The program had run since 2010 without a single statewide review. Minnesota’s autism therapy program grew 700 percent in five years while prosecutors charged providers in schemes exceeding $20 million. Wisconsin. Washington State. Every completed OIG state audit in these program categories has returned a 100% sample error rate. No red flags waived.

I spent more than 30 years watching capital move toward whatever oversight cannot reach. Medicaid fraud follows the same logic. The OIG’s standing recommendations – pre-payment review, real-time verification, provider credentialing before enrollment, annual post-payment audits – have appeared in federal reports for years. They remain only recommendations. Congress has the authority to make them requirements, with clawback consequences for states that fail to act. That is a straightforward, common-sense policy ask.

The hospice patients enrolled by fraudulent providers and billed to Medicare while receiving no care, or substandard care designed to minimize cost, are not just a rounding error. They are the very people these programs exist to serve. And tomorrow’s viral video is not a substitute for today’s actions.