Hospice where staggering 97% of terminal patients survive is accused of defrauding Medicare for $7.45 million
The FBI arrested a married couple Thursday accused of fraudulently billing Medicare for $7.45 million while running a hospice with a survival rate reported to be more than 97% after five years. They were the first in a series of arrests planned Thursday, federal officials told CBS News.
A high survival rate at a hospice provider is one of a series of red flags identified by state auditors for fraud because most people enter hospice care in the final stages of a terminal illness. In past cases of fraud, operators were found to be using false or stolen identities to collect federal reimbursements for palliative care.
The targets of the early-morning operation were Gladwin and Amelou Gill, a doctor and psychologist who co-own 626 Hospice, which does business as St. Francis Palliative Care, according to the FBI.
The FBI raid took place in the residential neighborhood of San Dimas, California, as FBI SWAT personnel announced over a loud speaker they have an arrest warrant. CBS News was at the Southern California location when the FBI agents executed the first early morning arrests. Also on the scene was Dr. Mehmet Oz, the Trump-appointed official who oversees the federal medicare system.
Hospice fraud in California has become a major focus of Republicans in Washington, who have been highlighting the problem in political attacks on prominent Democratic state leaders. Vice President JD Vance was recently placed in charge of an anti-fraud initiative.
California officials have told CBS News the issue of hospice fraud is a problem nationwide, but that state law enforcement agents have been investigating the issue and conducting their own enforcement actions over the past several years.
Bill Essayli, United States Attorney for the Central District of California, joined Oz from the scene as the FBI made these arrests. In response to questions about the politics surrounding the fraud issue, Essayli noted Thursday's law enforcement actions were approved by a federal judge who signed arrest warrants in the case.
Essayli told CBS News that officials are announcing 15 defendants, with more than half of them accused of hospice fraud. Some of those people are in prison and working with people on the outside to commit the fraud, Essayli said.
Red flags for fraud in hundreds of hospices
CBS News has been investigating fraud in the hospice industry in Los Angeles County for months. The investigation examined business and financial records of every hospice currently operating in LA County to identify operators that showed the warning signs that a 2022 state audit identified as potential indicators of fraud.
Over 700 of the roughly 1,800 hospices in LA County triggered multiple red flags for fraud as defined by the state, the CBS News analysis revealed. Those key warning signs include low patient counts, excessive billing, staff shared across multiple companies, and supposedly terminally ill patients who were later discharged alive.
Another red flag: multiple hospices clustered in one building, including one office plaza with 89 registered hospices, which patient advocate Sheila Clark called "ground zero" for Medicare hospice fraud.
Medicare fraud has been an acute issue in Southern California, but it's a nationwide problem. The Department of Health and Human Services' Office of the Inspector General reported in 2023 that suspected hospice fraud totaled an estimated $198.1 million. Americans pay into the taxpayer-funded health care for the elderly and disabled through paychecks and premiums.
Congressional Oversight Committee launches investigation
Last month, House Republicans announced that Congress mounted an investigation into "rampant hospice fraud," alleging that tens of millions in taxpayer funds may have been lost in improper payments to Southern California companies. In a letter to Gavin Newsom, California's Democratic governor, the committee cited the recent CBS News investigation.
The Republican-led House Oversight Committee, which has the authority to investigate, wrote to Newsom, asking for documents related to the state's "oversight and internal controls to detect and prevent fraud for its federally funded hospice programs."
"Recent reporting has revealed alarming evidence of fraudulent activity in California's hospice programs, including agencies overbilling Medicare and fraudulently enrolling beneficiaries without their knowledge," committee members wrote.
California attorney general's action to combat hospice fraud
State attorney general Rob Bonta says his office has brought criminal fraud cases against more than 100 defendants in the hospice industry and has filed about two dozen civil cases. But he acknowledged that more needs to be done.
"We need to be responsive to the red flags and react to them, not just count them," said Bonta, a Democrat. "Our main lane is the accountability side, the criminal investigations, the civil investigations. That's after the damage is done though, unfortunately."
A moratorium on issuing new hospice licenses in the state was recently extended through January 2027 because the state missed its deadline to enact new emergency regulations for hospices. Public health officials said they are balancing public feedback to vet new applicants and hold hospices accountable.
Bonta said multiple agencies are working on a task force to target the problem.
"So to the citizens that remain frustrated, I understand, I share your frustration, please know that we have increased our efforts," he said. "We're working overtime on prevention and accountability, and we will continue until hospice fraud in California is rooted out."