Eighty-nine licensed hospice companies. One three-story, 32,000-square-foot office building in Van Nuys, California. That is what state records show at the Merabi Professional Medical Plaza, a concentration so absurd it practically dares someone to ask questions.
CBS News did exactly that, visiting the building and finding what patient advocates and federal regulators have long suspected: a potential epicenter of Medicare fraud, where dozens of companies appear to exist on paper while doing little to nothing for actual patients.
Think about 89 separate hospice operations sharing a 32,000-square-foot building. That works out to roughly 360 square feet per company, smaller than a studio apartment. These aren't tech startups sharing a WeWork. They are licensed medical providers billing the federal government for end-of-life care.
Sheila Clark, a patient advocate who has worked to expose Medicare fraud in the hospice industry, said the building caught her attention immediately:
This particular building I noticed, I'm like, 'dang, how can there be that many licensed and certified hospices in this tiny little building?'
Clark called the arrangement "no sense." She's right. It makes no sense unless you understand what it actually is: not a hub of compassionate care, but a billing address.
The building's owner, Kambiz Merabi, disputes the number. He says only 12 hospice companies currently operate in the building. But 89 remain on the books. Merabi told CBS News he isn't responsible for policing his tenants:
I'm not a police or keeper of what they do, how they do business.
Fair enough. But someone should be.
This building didn't emerge in a vacuum. A 2022 California State Auditor report documented a staggering 1,500% increase in hospice companies in Los Angeles County since 2010. The county now has six times more hospice providers per elderly resident than the national average.
That kind of growth doesn't reflect a sudden epidemic of compassion. It reflects a gold rush, one funded entirely by American taxpayers through Medicare.
The numbers at the Van Nuys building tell the story in miniature:
Nearly 400 violations. Seventy-five companies. One building. The sheer density of the problem should embarrass every regulator who allowed it to fester for years.
The hospice model is supposed to be simple and humane: provide comfort care to terminally ill patients in their final months. Medicare pays a daily rate for each enrolled patient, which means the financial incentive is straightforward. Enroll patients, collect checks.
When you strip away oversight, that model becomes a magnet for fraud. Companies can register at a shared address, enroll patients who may not be terminally ill or may not even know they've been enrolled, and bill Medicare for services never rendered. The phenomenon is known as "clustering," where shell companies stack themselves at a single location to minimize overhead while maximizing billings.
The gap between 89 companies on paper and 12 actually present in the building tells you everything. Where are the other 77? What services are they providing, and to whom? Those are questions that should have been asked a decade ago, when the explosion in Los Angeles County hospice registrations first became impossible to ignore.
California Attorney General Rob Bonta called the situation "unacceptable," which is the kind of word politicians reach for when they want credit for outrage without accountability for inaction.
We're committed to tackling the issue until we root it out and extinguish all fraud.
The 2022 state auditor report landed on desks across Sacramento nearly three years ago. The 1,500% growth rate didn't happen overnight. Bonta's commitment to rooting out fraud would carry more weight if California's regulatory apparatus hadn't spent years waving companies through the licensing process while the problem compounded.
This is a state that prides itself on aggressive regulation of businesses, from fast-food wages to emissions standards. Yet when it comes to a sprawling Medicare fraud industry operating in plain sight, the urgency arrived remarkably late.
At the federal level, the Centers for Medicare and Medicaid Services under Dr. Mehmet Oz has moved to shut down the pipeline. Oz described the agency's approach in terms that taxpayers should find refreshing:
I want to make it clear, we're not going to pay you money just because you sent me a piece of paper with a bill on it. We're going to check to make sure that's legitimate, and that document is evidence that you actually performed something that's helpful to the American people.
He added bluntly: "Or you're not getting money from us."
Oz said the agency has "dramatically accelerated our ability to take out the bad guys by stopping their payments." That is exactly the right lever to pull. Fraud operations survive on cash flow. Cut the payments and the ghost companies dissolve on their own.
Even Merabi, the building's owner, acknowledged the need for enforcement:
I'm all for it because at the end of the day, you and I are paying for all those things that are not right.
It is easy to frame hospice fraud as a financial crime, and it is one. Every fraudulent dollar billed to Medicare comes from the same pool that funds care for Americans who are genuinely dying and genuinely in need.
But the human cost runs deeper. Hospice exists because dying patients and their families deserve dignity. Every fraudulent company that games the system erodes trust in a program designed for the most vulnerable moment of human life. Families making agonizing decisions about end-of-life care deserve to know the provider they choose is real, staffed, and accountable.
When 89 companies share one small office building, that trust is a fiction.
For years, the regulatory state that California loves to expand in every other direction somehow couldn't manage basic oversight of an industry growing at 1,500%. Federal regulators flagged hundreds of violations but the companies kept billing. Advocates like Sheila Clark sounded alarms that went largely unheard.
Now CMS is doing what should have been done long ago: treating a billing address as evidence, not as entitlement. The money stops when the proof starts. That is not a radical concept. It is the bare minimum. And for the taxpayers who have been funding this racket, it is long overdue.
