On February 5, 2026, California Attorney General Rob Bonta announced multiple felony arrests and charges against seven individuals in Monterey County for hospice fraud. Those arrested include the owner of two hospice companies, two co-owners of a third hospice company, three doctors, and one nurse. The arrests and charges stem from a joint investigation by the California Department of Justice (DOJ) and the US Department of Health and Human Services Office of the Inspector General (HHS-OIG).
The DOJ received a referral from the California Board of Registered Nursing after fraudulent activity was discovered in connection with the three hospice companies. The Division of Medi-Cal Fraud and Elder Abuse (DMFEA) initiated a multi-year investigation, which revealed a sophisticated conspiracy to defraud Medi-Cal and Medicare involving the owners, doctors, and nurses associated with the companies.
The defendants owned, operated, or worked for the three hospice companies simultaneously. They recruited, enrolled, and certified patients for hospice services who did not suffer from a terminal diagnosis. Some patients were unaware that hospice care is intended for individuals who are terminally ill, or that they had been enrolled in hospice services at all. To avoid detection, the defendants transferred several patients between the three companies after six months and continued fraudulently billing for hospice services.
The total loss to Medi-Cal and Medicare is alleged to be $3,211,419.79. On January 30, 2026, DMFEA filed felony charges in Monterey County Superior Court against the head nurse, the three owners, and the three medical directors, alleging false or fraudulent claims, conspiracy to commit a crime, and an aggravated white-collar enhancement.
Compliance Perspective
Issue
Healthcare providers participating in Medicare and Medicaid are responsible for ensuring that all services billed are medically necessary, appropriately authorized, and fully documented in accordance with federal and state regulations. Hospice services are covered only for individuals who meet strict eligibility criteria, including a terminal diagnosis with a life expectancy of six months or less if the illness runs its normal course. Gaps in oversight—such as inconsistent verification of patient eligibility, unclear documentation standards, or insufficient review of referrals and enrollments—can lead to improper billing, false claims, and regulatory penalties. Providers must maintain effective compliance programs supported by clear policies, staff education, and ongoing monitoring.
Discussion Points
- Policies and procedures should clearly define eligibility requirements, documentation expectations, referral processes, and safeguards against inappropriate billing. Periodic review can help identify gaps or inconsistencies and reinforce adherence to Medicare and Medicaid regulations. Working with an experienced healthcare consultant can provide additional guidance in evaluating existing compliance programs, identifying potential risks, and implementing best practices.
- Ensure that staff have a solid understanding of hospice eligibility criteria as well as the correct procedures for making and documenting referrals. Instruction on recognizing red flags of fraud—especially involving third-party contractors and referral sources—can help staff avoid inadvertently participating in misconduct. Med-Net Academy offers the course Red Flags of Fraud, which provides practical guidance on identifying suspicious activity and following proper reporting protocols.
- Regular audits should be conducted to confirm that all hospice services meet eligibility requirements and that documentation supports medical necessity. Focused or targeted audits can help detect issues early, particularly in areas identified through Quality Assurance and Performance Improvement (QAPI) activities. Engaging a third-party consultant for mock or specialized audits can provide an objective review, reinforce accountability, and support preparedness for survey activity or regulatory inspections.
*This news alert has been prepared by Med-Net Concepts, Inc. for informational purposes only and is not intended to provide legal advice.*