The obscure California program that loses billions every year to scammers

In an exclusive investigation, we shine a light on one of California’s largest health care initiatives: the In-Home Supportive Services Program, or IHSS.

Thus far, coverage of fraud in California has focused on alleged schemes related to unemployment insurance, hospice care, and food stamps.

IHSS pays family members and other individuals to provide home-based care for the elderly and disabled— at a cost of nearly $30 billion per year.

California offers the program through Medi-Cal, its version of Medicaid, and pays providers with a combination of federal, state, and county funds.

On the surface, IHSS presents itself as an instrument of compassion, directing billions to caregivers who help with cooking, personal care, laundry, and other daily needs inside recipients’ homes.

California Governor Gavin Newsom at the 19th Annual California Hall of Fame Ceremony. Getty Images

But a growing number of experts and critics argue that the program is rife with fraud, losing roughly an estimated $6 billion to $12 billion yearly to scammers.

Meantime, the state’s powerful home-care unions collect more than $149 million in membership dues, funneling money into the political network supporting Gavin Newsom and California Democrats.

This is the story of a government that has allowed compassion to become a mask for fraud, creating a self-reinforcing system that keeps the Democratic establishment in power. 

In 1973, California created what became the IHSS program to provide in-home care to the elderly and disabled. The IHSS caseload exploded in the 1980s, prompting the state to impose hour caps on care providers.

IHSS has long been considered a magnet for fraud.

In 2009, then-Gov. Arnold Schwarzenegger estimated that up to 25 percent of IHSS claims were fraudulent. After growth of the program’s rolls exploded in the early 2000s, Schwarzenegger signed legislation aimed at curbing abuse.

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But soon after the law’s passage, a state workgroup, teaming with representatives from “labor organizations,” introduced a key loophole that barred regulators from conducting fully randomized, unannounced home visits, leaving the program more exposed to scammers.

Since then, the program has expanded dramatically again. “IHSS provider” has become the largest low-wage occupation statewide, with more than 800,000 taxpayer-funded caregivers offering everything from grocery shopping to personal care. 

The system operates largely on trust. Providers self-report their timecards and check-in records. In roughly 60 percent of cases, providers and beneficiaries live together.

IHSS building.

County-level fraud controls appear to be lacking. Even when complaints are lodged, investigations apparently can be slow, and prosecutions slower still.

According to the state’s Department of Social Services, for one 12-month period between 2023 and 2024, counties received nearly 7,000 fraud complaints; 28 counties recorded 964 fraud investigations, resulting in just 39 cases prosecuted. 

California, in other words, is sending billions of dollars per year to a program that is easy to exploit, difficult to administer, and almost impossible to supervise.

 In 2024, the U.S. Department of Justice announced prosecutions for alleged IHSS fraud in California. 

In one case, the DOJ alleged that San Dimas resident Giacomo Lorenzo Garbarino billed the state for more than $170,000 in fraudulent IHSS and Medi-Cal services over a five-year period. The patient in his care was reportedly hospitalized or living in a facility at the time and thus ineligible for IHSS reimbursement.

Last year, federal officials announced another round of IHSS fraud prosecutions. In one case, prosecutors alleged that Maryam Erambakhsh falsely claimed payments for caring for her parents while they were outside the United States.

These cases may be the tip of the iceberg. Haywood Talcove, CEO of LexisNexis Risk Solutions for Government and a nationally recognized fraud expert, estimates that annual IHSS fraud could amount to 20 percent to 40 percent of total program spending. Applied to projected IHSS outlays for fiscal year 2025–26, that suggests roughly $6 billion to $12 billion in losses.

Multiple senior officials at the U.S. Department of Health and Human Services (HHS) have described a similar pattern, estimating that about 25 percent of the Medi-Cal budget is lost to fraud. The share is likely higher for IHSS, given the program’s structure and its susceptibility to abuse.

Earlier this year, Mehmet Oz, head of the Centers for Medicare and Medicaid Services, set off a firestorm of controversy with the claim that criminal networks, including the “Russian Armenian mafia,” were running massive hospice and home care scams in LA. He suggested that Armenians in LA were disproportionately represented among the leaders of hospice fraud rings.

One red flag for social-services fraud, Talcove suggested, is high community usage rates, and Armenian speakers in Los Angeles do appear to be significantly overrepresented among the county’s IHSS providers and recipients.

High utilization rates do not, on their own, prove fraud. But analysts such as Talcove argue that “organized criminal groups” are “taking advantage of the program at scale.” Using a conservative 25 percent fraud estimate—within Talcove’s range and consistent with HHS officials’ broader Medi-Cal assessments —scammers may have siphoned at least $35 billion from IHSS during Gavin Newsom’s administration.

Newsom has no incentive to crack down on a program that is enriching his most powerful political allies.

Despite some initial noise about reform, Newsom has sought to increase IHSS funding by an additional $1.1 billion, to a total of $33.4 billion, boasting that his administration has invested billions of state taxpayer dollars into the program. (When we reached out to Newsom’s office for this story, a California Department of Social Services spokesman said that “[f]raud in the IHSS program is not widespread.”)

Given these political realities, the only plausible check on IHSS may come from Washington.

The Trump administration could condition federal funding on rigorous audits and structural reforms. HHS Secretary Robert F. Kennedy Jr. could require California to mandate re-registration of all caregivers and recipients using third-party identity verification and expand random, unannounced visits.

Absent such intervention, the corruption in California is unlikely to abate. It will take a countervailing authority — willing to confront not only fraudsters but also the political system that sustains them — to force meaningful change.

Christopher F. Rufo is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and the author of America’s Cultural Revolution. Kenneth Schrupp is an investigative reporter at City Journal.