Hospice Scandal: Federal Eyes on California

Two hands clasped together, one elderly and one younger, symbolizing support

California’s governor is trying to turn a Medicare fraud spotlight into a civil-rights fight—right as federal investigators say the state is ground zero for staggering hospice abuse.

Story Snapshot

CMS Administrator Dr. Mehmet Oz publicly highlighted alleged hospice and home-care fraud in Los Angeles that he said totals $3.5 billion and clusters around dozens of providers.
Gov. Gavin Newsom’s office filed a civil rights complaint, arguing Oz’s wording unfairly targeted Armenians and harmed local businesses.
California officials point to years of state crackdowns, including a 2021 law and hundreds of license revocations, as proof they are already acting.
Federal oversight is intensifying, with a House Energy & Commerce Committee hearing focused on Medicare and Medicaid fraud schemes.

Oz’s Fraud Warning Puts California’s Medicaid Oversight Under a Microscope

Dr. Mehmet Oz, serving as Administrator of the Centers for Medicare & Medicaid Services, triggered a political and policy storm after posting a video from Los Angeles’ Van Nuys area describing an alleged concentration of hospice and home-care fraud. Oz said the suspected losses add up to $3.5 billion and pointed to what he described as 42 hospices operating within a four-block radius. The claims landed amid ongoing investigations and long-running concerns about hospice licensing in California.

Oz’s push is not limited to a single viral clip. On Jan. 27, 2026, he sent California officials a detailed letter seeking data on Medi-Cal program integrity, including eligibility controls, oversight procedures, and fraud enforcement across hospice and home health. The letter asked dozens of questions and set the stage for a broader federal review: if California cannot document strong controls, federal auditors and investigators can narrow in on certification, billing patterns, and provider behavior.

Newsom’s Office Files a Civil Rights Complaint Instead of Answering the Core Allegations

Gov. Gavin Newsom’s office responded by filing a civil rights complaint with the U.S. Department of Health and Human Services’ Office for Civil Rights. The complaint argues Oz’s video used discriminatory or racially charged language by tying alleged criminal activity to Armenians, and it claims the statements damaged local businesses and discouraged participation in public programs. The Armenian National Committee of America filed a similar complaint, amplifying the criticism and pressuring federal officials to treat the matter as a civil-rights dispute.

Details reported from the neighborhood illustrate why the rhetoric matters. Oz filmed in front of an Armenian bakery and emphasized Armenian script on signs while using the phrase “Russian Armenian mafia,” a framing that community members say paints with too broad a brush. The bakery owner, Movses Bislamyan, publicly denied any organized-crime connection and said the controversy cut business by roughly 30%. Those concrete consequences strengthen the argument that broad ethnic labeling can harm innocent people even when fraud investigations are legitimate.

California’s Record Shows Real Fraud—But Also Real Questions About Accountability

Newsom’s team points to state actions that acknowledge a serious underlying fraud problem. California has pursued hospice fraud investigations for years and, after concerns escalated, Newsom signed a 2021 law that halted new hospice licenses. The state also revoked more than 280 licenses and examining hundreds more. That history undermines any claim that the fraud issue is imaginary. At the same time, the scope described by federal officials raises the question voters keep asking: how did it get this large in the first place?

Oz’s critics argue his approach is politically provocative and imprecise. His supporters argue the public has a right to see where taxpayer dollars are being abused, especially in Medicare and Medicaid programs that families depend on. This does not include a detailed list of providers tied to Oz’s $3.5 billion figure, and notes that evidence was not fully laid out in the video itself. That limitation makes the upcoming oversight process—audits, hearings, and case filings—essential for separating documented fraud from broad insinuations.

Congress Moves In as the Trump Administration Signals a Wider Anti-Fraud Push

The House Energy & Commerce Committee scheduled hearing titled “Common Schemes, Real Harm: Examining Fraud in Medicare and Medicaid,” with attention on California’s problems. That matters because hearings can lock agencies into public commitments, put numbers on the record, and pressure states to produce data they would rather manage behind closed doors. Oz also argued in a televised interview that solving California’s issues would help the nation, signaling a model-state approach to enforcement.

The immediate question is whether the dispute stays focused on rhetoric or shifts back to program integrity—where patients, families, and taxpayers have the most at stake. Civil-rights complaints can be appropriate when government officials stereotype communities, but they do not recover stolen funds or prevent future billing scams. What remains unclear is how the Office for Civil Rights will rule, what evidence CMS and law enforcement will publicly release, and whether California will provide comprehensive oversight data responsive to Oz’s letter.