Hospice fraud uses stolen identities for fake patients

Earlier this month, the California Attorney General's office filed charges against 21 people tied to a $267 million Medi-Cal hospice fraud ring.

The case, dubbed Operation Skip Trace, accuses the defendants of buying stolen personal information on the dark web, enrolling those identities in Medi-Cal through Covered California, and running 14 shell hospice companies that billed the state for end-of-life care that was never provided.

The patients were not dying. In many cases, they did not even live in California. They were names and Social Security numbers pulled from data breaches and turned into billing line items.

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DOCTOR DENIES KNOWING ABOUT RAMPANT LA-AREA MEDICARE FRAUD USING HIS PROVIDER NUMBER

Scammers pay people to put hospice companies in their names, even though they do not run them. This hides the real operators and gives the group a licensed business it can use to submit bills. Behind the scenes, others buy stolen personal information from dark web marketplaces. This includes names, dates of birth, Social Security numbers and addresses.

They then use that information to enroll people in Medi-Cal through Covered California and list them as terminally ill hospice patients. Next, the companies submit claims for visits, prescriptions and daily care tied to those names. They never provide any services. Because hospice care pays a flat daily rate, the billing continues as long as the identity stays active.

Operation Skip Trace is the latest in a string of hospice fraud cases that federal and state officials have been tracking for years. The typical hospice in Los Angeles County bills Medicare roughly $29,000 per patient, more than double the national average. Of the roughly 1,800 hospices operating in LA County, more than 700 have triggered multiple fraud red flags, according to state auditors.

On March 23, 2026, the U.S. House Committee on Oversight and Government Reform sent a letter to California Governor Gavin Newsom requesting documents on the state's oversight of federally funded hospice programs. Committee members cited a "well-documented history of fraud," including agencies enrolling beneficiaries without their knowledge and overbilling Medicare.

The Centers for Medicare & Medicaid Services estimates that Los Angeles County alone accounts for roughly $3.5 billion in hospice fraud. Newsom's office said California has revoked more than 280 hospice licenses, maintained a moratorium on new providers and has hundreds more operators under investigation.

GOOGLE SEARCH LED TO A COSTLY SCAM CALL

Most identity theft stories focus on credit cards, tax returns or new loans. Those usually show up on your credit report. Hospice fraud works differently. Scammers can use your information inside a Medicare or Medi-Cal billing system without triggering a credit alert or hard inquiry. That means it can go unnoticed.

Watch for warning signs like Medicare Summary Notices listing services you never received, Medi-Cal enrollment letters in your name or explanation-of-benefits statements from providers you have never visited.

If you apply for coverage later, you could face a denial because records show you are already enrolled in another state. If your data was exposed in a breach, it may already be circulating on the dark web.

The Centers for Medicare & Medicaid Services recommends reviewing your Medicare Summary Notice each quarter through MyMedicare.gov. If you are enrolled in Medi-Cal, check your Covered California account for unexpected activity and report anything suspicious to the California Department of Health Care Services through its Stop Medi-Cal Fraud line.

Suspected Medicare fraud can be reported to 1-800-MEDICARE or directly to the HHS Office of Inspector General at oig.hhs.gov/fraud. The Senior Medicare Patrol offers free help reviewing statements and filing reports in every state. If you notice unfamiliar charges or enrollment activity, place a fraud alert with Equifax, Experian and TransUnion. Medical identity theft often overlaps with other types of fraud.

Hospice fraud schemes like Operation Skip Trace often begin long before billing ever happens. The personal data used is typically traded on dark web marketplaces after large data breaches. Services like Aura monitor these marketplaces and data broker listings for exposed personal information, including Social Security numbers, driver's licenses, and email addresses. They also track public record changes, such as address updates that may signal fraudulent enrollment, and monitor credit files across Equifax, Experian, and TransUnion.

If suspicious activity is detected, users receive support from fraud resolution specialists who help contact agencies, prepare documentation, and dispute unauthorized accounts. Plans may also include identity theft insurance for eligible recovery costs.

No service can prevent every misuse of a stolen identity. But when fraud happens inside systems you rarely check, like Medicare or Medi-Cal, early alerts can make a critical difference.

Credit monitoring services track activity across the major credit bureaus and alert you when something changes. That gives you a chance to act quickly by freezing your credit, disputing unfamiliar accounts or contacting the lender.

Many services monitor your credit across Equifax, Experian and TransUnion and send alerts soon after activity is reported, so you are not waiting for a daily update to spot a problem.

Some tools also let you lock your credit file with a single tap, which can help stop new applications before they are approved.

Beyond credit reports, certain services monitor other personal data that may be exposed in breaches or sold online. That can include email addresses, phone numbers, driver's license details and even medical IDs, all of which can be used in identity theft schemes.

While no service can prevent every type of fraud, having real-time alerts and broader monitoring can help you catch suspicious activity earlier and limit the damage.

See my tips and best picks on Best Identity Theft Protection at CyberGuy.com

This case shows how identity theft is evolving. It is no longer just about draining bank accounts or opening credit cards. Scammers are now turning people into invisible patients inside systems most of us never check. That shift makes this fraud harder to detect and slower to stop. The best defense is to know where your information can appear and to check systems you would not normally review.

If someone could use your identity for months without you knowing, would you ever catch it before the damage is done?  Let us know by writing to us at CyberGuy.com

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