How hospice fraud could haunt Newsom’s presidential ambitions

When James Comer sent a letter to Gavin Newsom calling California’s hospice system a site of rampant fraud — demanding records be submitted to the House Oversight Committee, and giving the governor until April 6 to comply — it landed like a subpoena at a wake.

Which, given the subject matter, is almost appropriate.

The congressional investigation centers on a simple, sobering fact: The number of hospices in LA County grew from 109 in 2010 to 1,841 in 2021 — a 1,500% increase — while the senior population grew by just 40%. The laws of supply and demand don’t explain that. Fraud just might.

Gavin Newsom was asked to turn over records related to hospice fraud in California. Anadolu via Getty Images

This isn’t a new story. In fact, it’s a very old one that California’s government had every opportunity to stop and chose not to. It didn’t start with Newsom, but it didn’t stop with him either. In many ways, it got worse on his watch.

Medicare’s hospice benefit was designed for the dying — a compassionate program that pays for palliative care during a patient’s final months. It is, by design, minimally supervised.

Patients are vulnerable, documentation is light, and the government pays on trust.

Fraudsters noticed. Schemes emerged involving illegal kickbacks, license-selling, and the mass enrollment of Medicare beneficiaries in hospice care without their knowledge or without providing any services at all.

By the mid-2010s, the warning signs were hard to miss. State records showed more than 2,100 complaints filed between January 2015 and August 2021, including nearly 350 alleging fraud or abuse.

Audit findings suggested that organized networks were systematically defrauding Medicare and Medi-Cal, the state’s Medicaid program. Federal investigators had, meanwhile, been targeting organized crime rings running similar schemes across the country.

California’s response — Newsom’s response — was to look the other way and call that governance,.

Then came 2022, Newsom’s reelection year, and a state audit that should have ended careers. Then-acting California State Auditor Michael Tilden informed the governor that his office found California’s “weak controls have created the opportunity for large-scale fraud and abuse” in hospice systems.

The audit identified a litany of red flags: many providers listed at the same address; very low patient counts; patients marked as terminally ill who were later discharged alive; excessive billing for services never rendered; staff shared across multiple hospices.

Twelve hospice and home-health-care agencies are registered to operate from this North Hollywood building. Pedro Colo for CA Post

These weren’t subtle anomalies so much as fingerprints, the unmistakable marks of an industry being systematically looted.

Newsom signed a moratorium on new hospice licenses in 2021. His office has leaned on this fact ever since, deploying it like a shield. The moratorium was eventually extended through January 2027 while the state develops new regulations.

But the freeze did little about the expansive network of fraudulent operators already inside the system — operators who had spent years stacking licenses, billing phantom patients, and operating from strip malls with “For Rent” signs in the window.

This story has no ideological home. It has been investigated by state auditors, federal inspectors general, and independent journalists across the political spectrum.

ProPublica, not exactly a Republican attack dog, found in 2023 that despite California’s moratorium, new hospices were still receiving Medicare certification, including 15 operating out of the same two-story LA building. The investigation wasn’t politically motivated. It was simply accurate.

The mechanism is almost elegant in its cynicism. Fraudsters had discovered they could obtain state licenses before the freeze and activate them later, one by one, drip-feeding new operations into the Medicare system whenever scrutiny fell on older ones.

California’s industry contacts call this “stacking.” A more accurate word is impunity.

When thousands of applicants were blocked by the hospice moratorium, some simply crossed off “hospice” on their applications and reapplied as home health agencies instead — a category the freeze didn’t cover. Every exit gets a new entrance.

This matters beyond California because Medicare doesn’t belong to California. It’s funded by payroll taxes from workers in every state.

The House Oversight Committee made its allegations plain: It said that Newsom’s administration had been aware of credible fraud reports for at least four years and failed to prevent, detect, or stop it.

For a man who so desperately wants to be president — who has spent years auditioning for the role on cable news, at party events, and in pointed jabs at Washington — it is a defining failure.

You don’t get to preside over a decade in which fraudsters allegedly commit theft from dying patients and then run for president on competence.

Newsom can mock the investigation on social media and make lame jokes about political cosplay, but ultimately, the audits are real, the empty buildings are real, and the patients enrolled in hospices without their knowledge are real, too.

California’s hospice racket is the answer to the question more people should be asking: What, exactly, has Gavin Newsom been running?

The honest answer is a state that works beautifully — for the people stealing from it.