A report from California’s acting State Auditor warned of widespread fraud risks in the state’s hospice system years before recent enforcement actions, according to remarks from Kayleigh McEnany, who cited the findings alongside statements from Robert F. Kennedy Jr. and hospice industry observers.

McEnany referenced an 87-page audit completed in 2022 and addressed to Governor Gavin Newsom.

“We have unearthed an explosive report,” she said.

She added, “The 2022 document that I am holding is an 87-page report from the then-acting State Auditor in California, addressed directly to the Governor of California, warning in no uncertain terms that the state's weak oversight of hospice agencies has created opportunities for large-scale abuse and fraud.”

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She noted that the report detailed multiple indicators of potential fraud, particularly in Los Angeles County.

“The subtitle warns of the extensive fraud plaguing California today,” McEnany said.

She added that the audit cited “a rapid increase in the number of hospice agencies with no clear correlation to increased need.”

According to the report, population growth did not match the expansion in hospice providers.

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“The aged population increased 40% in California between 2010 and 2021 while the hospice agencies increased aid an astonishing 1,589%,” McEnany said.

She also highlighted findings about geographic concentration.

“Another indicator was the excessive geographic clustering of hospices, with sometimes dozens of separately licensed agencies located in the same building,” she said.

The audit also noted irregular discharge patterns.

McEnany said there were “abnormally high rates of still living patients discharged from hospice care, Despite hospice typically offering care for people expected to live six months or less.”

She referenced a map included in the report showing a concentration of providers in one area.

“They even gave Newsom a map quote, 210 active hospice agencies located within one mile of each other on Van Nuys in Los Angeles County,” McEnany said.

She added that the auditor concluded “that a network, or networks of individual perpetrators in Los Angeles County are engaging in a large and organized effort to defraud the Medicare and Medi-Cal hospice programs.”

Robert F. Kennedy Jr. described actions taken against suspected fraudulent providers in Los Angeles.

“The hospices in Los Angeles. We've shut down 500 of them,” he said.

Kennedy added, “We have not gotten one call from a congressperson or one call from a patient. Why? Because those hospices did not exist.”

He continued, “We're signing up patients. They were getting patient IDs, signing them up, and charging us $6,000 a month for that patient.”

Kennedy said investigators identified the issue based on patient outcomes. “How did we detect them all? Because the patients never died.”

McEnany also pointed to regulatory issues cited in the audit.

“The auditor notes that the California Department of Public Health had failed to issue regulations for its hospice licensing process despite having had the authority to do so since 1991,” she said. She then quoted the report’s findings on licensing decisions.

“We reviewed cases in which public health became aware of possible fraud during the licensing process, and instead of denying the licenses, this is Gavin Newsom's health agency, it granted licenses to these hospice agencies.”

Sheila Clark, speaking about conditions on the ground, described situations where licensed facilities appeared inactive.

“You'd be amazed at how many hospices you can walk up to in California and there is nobody there,” Clark said.

She added, “There is five months' worth of mail that you can see stacked up from CMS, and nobody's there, and that passed a survey.”

Clark questioned how such operations were approved.

“How did that happen? How do you put a hospice in a burrito stand in California? How do you put a hospice in a tire store in California that all had to be vetted through licensure and through certification and accreditation?”

McEnany noted that the audit also addressed enforcement history.

“Since 2015 the California Department of Public Health has never suspended a hospice license and has revoked a hospice license only once,” she said, citing the report.

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The auditor recommended several steps, including forming a task force to investigate and prosecute fraud and establishing working groups to assess risks.

McEnany said that legislation signed in 2021 imposed a moratorium on new hospice licenses, which remains in place but is set to expire.

Recent enforcement actions, including investigations and raids tied to hospice operations, have brought renewed attention to the findings outlined in the earlier audit and the regulatory oversight of hospice providers in California.

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