Feds allege $2 billion in California healthcare fraud, 15 charged

Sonja Sharp, Los Angeles Times on Oct 22, 2026

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LOS ANGELES — The Department of Justice announced a sweeping take-down of doctors and others they say lured vulnerable patients into needless surgical procedures, sham treatment programs and bogus hospice care, bilking taxpayers for nearly $2 billion, according to charges released Thursday.

Among the most chilling allegations, two Angelenos were charged with paying so-called "body brokers" in Texas to recruit homeless residents from out of state and those in 12-step programs into sham sober living homes in California, where they were allegedly signed up for pricey insurance policies and frequently left to languish in decrepit squats.

"This was not treatment, it was not recovery. It was exploitation," said Colin McDonald, assistant U.S. attorney general for the National Fraud Enforcement Division.

In another case, an Anaheim cardiothoracic surgeon and a Tarzana chiropractor allegedly teamed up to steer patients into needless and sometimes repeated X-ray guided procedures to score plaque from their arteries in what McDonald called "an assembly line of fraud."

Three more Angelenos were charged with strong-arming local seniors into hospice care when none of them were dying — a form of fraud for which "Los Angeles has become ground zero," McDonald said.

Prosecutors called it "one of the top dollar take-downs in the state of California."

The Justice Department said in a news release that 15 defendants had been charged, including six medical professionals. Federal authorities said eight people had been arrested, with five of them expected to make their initial appearances this afternoon in United States District Court in downtown Los Angeles. Two others were scheduled to appear in the Northern District of Texas, and one in the Northern District of Illinois. It's unclear whether they are represented by attorneys; they have not yet entered pleas in response to the charges.

The Trump administration has cast public benefits fraud among its arch-villains, blaming bad actors in blue states — and often the states themselves — for the sharply rising cost of care.

"California has a fraud problem," said First Assist. U.S. Atty. Bill Essayli, who sought to connect the cases with his office's simultaneous attempt to sequester midterm ballots it says were issued to noncitizens. "Whether it's hospice fraud, or healthcare fraud or election fraud, California does fraud best."

Rates of Medicaid and Medicare fraud exploded in the wake of the COVID-19 pandemic, when many rules were loosened and oversight strained by efforts to expand care.

Last fall, the Department of Justice went after Medicaid-funded autism treatment schemes concentrated in Minnesota's Somali community, while seeking to paint the state's governor Tim Walz as complicit in their operation.

Essayli has similarly hammered California Gov. Gavin Newsom and the state's other Democratic leaders over hospice fraud and other schemes exploiting public benefits, frequently calling him the "king of fraud."

California Atty. Gen. Rob Bonta is scheduled to make his own announcement about state healthcare fraud prosecutions at a news conference Thursday morning.

"I think the AG's holding a press conference to talk about what he's done — getting fraudsters after they've stolen hundreds of millions of dollars is not good enough," Essayli said. "The fraud should never have happened in the first place."