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Feds’ fraud takedown: Just the start

Federal authorities arrested eight people in Los Angeles tied to a hospice fraud scheme involving more than $50 million in intended Medicare losses.

Patients who were not dying were placed into hospice care and were billed to taxpayers as if they were.

That is what federal prosecutors say was happening.

In some cases, individuals were allegedly paid to participate, turning a program meant for end-of-life care into a revenue stream.

And this is only what has been charged so far.

Investigators have identified hundreds of questionable hospice providers operating across Los Angeles County, with some addresses linked to dozens of entities and little or no real medical activity. Billions in suspicious billing have been flagged in the region in recent years.

That is the environment in which today’s arrests took place.

The U.S. Attorney’s Office in Los Angeles, led by Bill Essayli, deserves credit for acting decisively. Arrests were made, charges were filed, and a clear signal was sent that this conduct will be prosecuted.

That matters because this activity did not develop overnight.

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It grew in plain sight, while warning signs accumulated and oversight failed to keep pace.

The California Post has been raising questions about the surge in hospice providers that did not align with population needs or legitimate demand. That scrutiny helped bring attention to patterns that were too widespread to ignore.

Additional reporting confirmed what was happening on the ground, and Republican Central Valley Assemblywoman Alexandra Macedo deserves recognition for taking the next step. She visited the listed addresses and found empty offices, disconnected phone numbers, and no evidence of legitimate medical operations associated with licensed entities.

This represents yet another major fraud scandal chalked up to the failed governorship of aspiring President Gavin Newsom. With Newsom, the fraud just keeps coming.The pattern is familiar.

California lost tens of billions of dollars to unemployment insurance fraud during the pandemic, including payments sent to prison inmates and overseas fraud rings. A recent audit found that the Employment Development Department spent $4.6 million on thousands of unused cell phones and hotspots that sat idle while monthly service bills continued to accrue. The state’s workers’ compensation system has been plagued for years by organized fraud schemes involving inflated claims and medical billing abuse. COVID relief programs were riddled with fraudulent applications, overwhelming basic verification systems.Public money is lost, and the cost is shifted back to taxpayers.In this case, the exposure goes beyond California.

Medicare funds are federal, which means taxpayers across the country are on the hook when fraud occurs at scale.

The mechanics of the scheme are straightforward.

Individuals who were not terminally ill were enrolled in hospice programs. Medical professionals certified eligibility, and Medicare was billed for services that were not appropriate or necessary.In some cases, patients were allegedly paid to participate.Hospice care, which should be focused on comfort and dignity at the end of life, was treated as a billing opportunity.That has consequences beyond the financial loss.Patients who genuinely need hospice services are also victims. Resources are diverted, legitimate providers are crowded out, and trust in the system is weakened at a time when families are making difficult decisions.

Those impacts are real.They affect families at the most vulnerable moment of their lives.Federal officials are now paying closer attention.

Dr. Mehmet Oz, who now serves as administrator of the Centers for Medicare and Medicaid Services, was recently in Los Angeles highlighting concerns about fraud in federal health programs and the need for stronger oversight. Vice President JD Vance, who has been tasked with focusing on fraud and waste, has also made clear that these abuses are now a national priority.

That level of attention is necessary.

However, enforcement after the fact does not fix the underlying failure.

The central question is accountability.

How did hundreds of questionable providers operate in a single region without earlier intervention? Why did licensing and oversight systems fail to identify obvious red flags

Those questions lead directly to state and local leadership.

Gov. Newsom is on the national stage, clearly positioning himself for higher office. This is the state he governs.

This is the system that failed.

Voters deserve answers.

The same is true for those seeking to replace him. Every Democrat running for governor will have to explain how they would prevent this from happening again under their watch.

And the spotlight does not stop in Sacramento.

Much of this activity occurred in Los Angeles, placing responsibility on local leadership, including Mayor Karen Bass, and the network of agencies responsible for oversight on the ground. When local systems fail, fraud flourishes

That is exactly what happened here.

Today’s federal action is necessary.

But it is only the beginning.

Unless the structural failures that enabled this are addressed, this will not be the last scandal.

Taxpayer dollars should go to people who actually need care, not to fraudsters exploiting the system.

Jon Fleischman, a longtime strategist in California politics, writes at SoDoesItMatter.com.

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