The massive fraud operation, dubbed "Operation Skip Trace," resulted in the arrest of five people and searches of ten locations across Southern California on April 8, with authorities seizing two handguns and over $757,000 in cash. The scheme involved 14 hospice companies that were purchased by straw owners who then billed Medi-Cal for hospice services using stolen identities of non-California residents, with no legitimate hospice care ever being provided.
"Over the life of this fraud scheme, not a single legitimate hospice service was ever provided yet millions were billed in a brazen, calculated scheme that exploited the Medi-Cal system," said Attorney General Bonta. "This wasn't a mistake or a loophole; it was deliberate fraud." The investigation began after the California Department of Health Care Services identified irregularities and referred the matter to the Department of Justice's Division of Medi-Cal Fraud and Elder Abuse.
The defendants face charges including conspiracy to commit health care fraud, health care fraud, money laundering, and identity theft, with aggravated white collar crime and money laundering enhancements. Prosecutors allege the suspects purchased personal identifying information from the dark web, enrolled those stolen identities in Medi-Cal through Covered California, and then used the fraudulent hospice companies to submit bills for services never rendered over multiple years.
The case represents the latest in California's aggressive pursuit of hospice fraud, with Bonta's office conducting 294 hospice-related investigations, filing 119 criminal cases, and securing 51 convictions during his tenure. In 2025, the DOJ launched a comprehensive hospice fraud initiative that included public education campaigns, community forums, and a dedicated reporting helpline to help families and healthcare providers recognize fraudulent practices.
"Fraud is a direct attack on Medi-Cal members who rely on us for care, and we will not stand for it," said California Department of Health Care Services Director Michelle Baass. Governor Gavin Newsom praised the swift action, noting that "since these are state charges, Donald Trump cannot pardon these individuals in exchange for campaign donations."
The investigation involved coordination between multiple state agencies, including the California Department of Justice, Department of Health Care Services, and California Franchise Tax Board. The case highlights California's strengthened oversight of hospice providers following a pattern of fraudulent schemes targeting the state's Medicaid program.
The defendants are presumed innocent until proven guilty, and the case will proceed through California's criminal justice system. The Department of Justice has established multiple channels for reporting suspected hospice fraud, including an online portal and toll-free hotline, as part of its ongoing effort to protect vulnerable patients and taxpayer resources.