Federal agents fanned out across Southern California on Thursday, arresting eight people and executing search warrants in what prosecutors called "Operation Never Say Die", a sprawling takedown targeting an alleged $60 million hospice-related fraud scheme that siphoned taxpayer money through Medicare and Medicaid for patients who, in some cases, were recruited in grocery store parking lots.
First Assistant U.S. Attorney Bill Essayli announced the operation during a news conference, saying charges would be brought against 15 individuals across greater Los Angeles County. The alleged schemes ranged from bogus hospice businesses registered to empty lots to convicted felons who were barred by law from running health care operations but did it anyway, using family members as fronts, The Center Square reported.
The arrests mark the latest federal enforcement action in a state that has become ground zero for health care fraud. And the political fallout is already underway, with California Republican lawmakers demanding to know how the schemes flourished for years under Gov. Gavin Newsom's watch while his press office scrambled to take credit for a 2021 moratorium on new hospice licenses.
Essayli laid out case after case during the news conference, each one a portrait of brazen fraud against a program designed to comfort the dying.
Lolita Minerd, 65, of Anaheim, allegedly ran Artesia-based Topanga Hospice Care, a business that Essayli said racked up a $9.1 million price tag over five years. One couple told investigators Minerd approached them at a grocery store and signed them up as patients. Each received $300 a month for letting Minerd use their names. Medicare paid $8.5 million on fraudulent claims filed on the couple's behalf alone, Essayli said.
Five of the cases involved hospice centers in Glendale, Artesia, Tarzana, and Simi Valley that allegedly billed Medicare for patients who were not terminally ill and did not qualify for hospice services, AP News reported.
Then there were Gladwin and Amelou Gill, a couple previously convicted of tax evasion who were legally barred from opening a hospice. Essayli said they used their daughter's name to open one anyway. Their operation pulled in more than $4 million in Medicare reimbursements and discharged 70 percent of its patients, a red flag for a business supposedly caring for people at the end of life.
Dr. Mehmet Oz, administrator of the Centers for Medicare and Medicaid, said he was in Los Angeles during the Gills' early-morning arrest. He told reporters the crackdown reflected a top-down mandate from the White House.
"These law enforcement leaders and these brave men and women that I was able to witness this morning go after these criminals are doing God's work. And they're going to be able to do it more effectively because there's been a demand made by the president and vice president of an all-of-government effort."
Oz also signaled the operation was far from over. "We're going to review every single hospice in California," he said, as Breitbart reported.
Perhaps the most striking detail: Nita Palma, 76, previously convicted of health care fraud, allegedly operated another fraudulent hospice company in Glendale alongside her husband, Adolfo Catbagan, 68. Essayli said the couple ran the operation for more than a year and a half, submitting over $4.8 million in fraudulent hospice claims. Medicare paid out more than $3.2 million.
Palma is currently in a federal prison in Seattle. The fact that a person already convicted of health care fraud could allegedly orchestrate a new scheme from behind bars raises hard questions about oversight, not just at the federal level, but in the state that licensed the business in the first place.
Essayli described one facility that discharged 85 percent of its patients, five times the national average for a business that exists to care for the dying. That number alone should have triggered alarm bells. It apparently did not, at least not soon enough.
The FBI's willingness to pursue large-scale fraud operations in California echoes a recent FBI bust of an alleged $17.4 million mortgage fraud ring that also targeted vulnerable populations in Los Angeles.
The prosecutor did not mince words about where he thinks the blame belongs. Essayli called California the "kingdom of fraud," as the Washington Times reported, and drew a direct line between the state's regulatory failures and the scale of the theft.
"This is not just a fraud problem. This is a California problem. The problem you see in California is that there is no vetting and no checking. They do not care because it's not their money."
The U.S. House Committee on Oversight and Government Reform has estimated that Medicare was defrauded an estimated $3.5 billion from fraudulent reimbursement payments in Los Angeles County alone. That figure dwarfs the $60 million at issue in Thursday's arrests, suggesting the problem runs far deeper than one operation can reach.
The House Oversight Committee has also demanded answers from Newsom over $105 million in alleged Medicare hospice fraud, a parallel investigation that underscores how long California's hospice industry has operated as a magnet for grifters.
Assemblymember Alexandra Macedo, a Republican from Tulare, has been conducting her own hospice fraud investigation in recent weeks. She found that 300 separate businesses were tied to a small number of addresses, many of which turned out to be empty lots or run-down, empty buildings. She sent the results of her investigation to Congress.
Macedo said Dr. Oz personally told her about the arrests and framed them as the opening round of a broader campaign.
"Dr. Oz was excited to share with me that arrests were happening, and that this was just the beginning of what they would be doing out in California to combat hospice fraud. But they have a lot of questions as to how this was allowed to happen under [Gov.] Gavin Newsom's watch for as long as it did."
Macedo also hinted that the people arrested may not be the masterminds. She described a pattern of "straw men" used as registered agents and suggested someone was coaching them.
"But there is very clearly somebody teaching them how to do this, or, in my opinion, a puppet master, so finding out who these people are attached to will come out with time."
State Sen. Tony Strickland, a Republican from Huntington Beach, told The Center Square that the arrests were overdue. He pointed to the human cost, not just the dollars, but the vulnerable patients whose names were exploited.
"Millions in taxpayer dollars were siphoned off while vulnerable patients were put at risk. It's time for real accountability, aggressive enforcement, and consequences for those who failed to act."
Federal enforcement actions like these have become more frequent as the administration ramps up accountability efforts across multiple fronts, from federal arrests tied to public-order disruptions to broader investigative campaigns by the bureau.
Gov. Newsom's press office responded Thursday morning with a post on X that read like an attempt to get out in front of the story.
"Great to see the federal government root out fraud in Trump's federal health care system in California! We're fully supportive."
The press office added that Newsom "banned new hospice licenses in 2021 because of rampant fraud." That moratorium, however, raises its own question: if the governor's office knew the fraud was "rampant" five years ago, why did it take federal agents, not state regulators, to make arrests?
Essayli's answer was blunt: "They do not care because it's not their money." Whether that indictment is fair to every state employee who touched these files, the results speak for themselves. Convicted felons ran hospice companies. Shell businesses operated from vacant lots. Medicare checks kept flowing. And the people whose names were used as props, the couple paid $300 a month to pretend to be dying, were left as footnotes in a $3.5 billion fraud landscape.
The FBI and the Centers for Medicare and Medicaid did not respond to requests for comment from The Center Square. The FBI under Director Patel has signaled a broader willingness to pursue complex financial investigations, and Thursday's arrests suggest that California's health care fraud industry is squarely in the crosshairs.
Charges against all 15 accused individuals are expected. Macedo's investigation continues, and her suggestion that a "puppet master" may be orchestrating the schemes from behind the scenes points toward a potentially wider conspiracy. The $3.5 billion fraud estimate from the House Oversight Committee means Thursday's $60 million operation, as large as it is, may represent only a fraction of what has been stolen.
Several questions remain unanswered. The names of all 15 accused individuals have not been publicly released. The specific charges have not been detailed. And the question of which state officials, if any, failed in their oversight duties has barely been asked, let alone answered.
When the state knew the fraud was rampant, banned new licenses, and then left it to the feds to actually make arrests, that is not oversight. That is a press release pretending to be governance.
