The attorney general’s cases, which include caregivers whose clients lived in five Bay Area counties, were announced the same morning that federal prosecutors in Los Angeles unveiled a nearly $2 billion takedown and declared that “California has a fraud problem.”
Attorney General Rob Bonta announced felony charges on Thursday against 103 caregivers in California’s In-Home Supportive Services program, accusing them of billing Medi-Cal for home-care hours while the people they were paid to look after were already in hospitals or nursing homes that Medi-Cal was also paying for.
The alleged losses total more than $4.5 million, according to the attorney general’s announcement, a sum Mr. Bonta described as “a small fraction of California’s $30 billion IHSS budget.” The cases came out of what his office called a yearslong review with the Department of Health Care Services, which runs Medi-Cal, built on data analytics and claims review that flagged overlapping bills.
The announcement landed on a day when the politics of benefits fraud in California were unusually raw. An hour earlier and across the street in downtown Los Angeles, federal prosecutors had announced their own case against 15 defendants, and the region’s top federal prosecutor used the occasion to criticize the state’s leaders.
What the state alleges
According to the attorney general’s office, investigators in its Division of Medi-Cal Fraud and Elder Abuse examined providers “from Butte County to San Diego County.” The people receiving care lived in 17 counties: Butte, Contra Costa, Fresno, Kern, Lake, Los Angeles, Napa, Orange, Riverside, Sacramento, San Bernardino, San Diego, San Joaquin, Santa Clara, Solano, Sonoma and Tulare.
Five of those counties are in the Bay Area. The office did not break down how many of the 103 cases, or how much of the $4.5 million, arose in each county.
The pattern described is narrow and mechanical: a provider records hours of in-home help during days when the client was admitted to an acute-care hospital or a skilled nursing facility. Because Medi-Cal pays for both, the overlap can be detected by matching claims. The announcement did not name any of the defendants. It noted that charges are allegations and that every defendant is presumed innocent until proven guilty.
In-Home Supportive Services pays for help with bathing, dressing, cooking and other daily tasks for more than 900,000 older and disabled Californians a year, according to the state. Many of the paid caregivers are relatives, including parents of adult children with disabilities. The attorney general’s office said home-based care saves about $100,000 a year per person compared with a nursing facility.
“This isn’t a political game for us,” Mr. Bonta said in the statement. “This is about protecting taxpayer dollars, protecting the programs that sick and vulnerable Californians rely on, and protecting our state.”
The federal case, and the federal critique
The Justice Department said its Los Angeles cases involved more than $1.8 billion in fraudulent claims to public and private insurers, including what it called the largest substance abuse treatment fraud scheme it had ever prosecuted: more than $1.6 billion billed for sham addiction treatment, with patients allegedly recruited from around the country with offers of free flights, housing and drugs. Other cases accuse a surgeon and a chiropractor of billing Medicare $134 million for unnecessary artery-clearing procedures, and accuse hospice operators of enrolling patients who were not dying. Eight defendants were arrested, the department said. None had entered pleas, and it was not clear whether they had lawyers, The Los Angeles Times reported.
At the federal news conference, Bill Essayli, the first assistant U.S. attorney for the Central District of California, said, “California has a fraud problem,” according to The Times. “Whether it’s hospice fraud, or healthcare fraud or election fraud, California does fraud best,” he added.
Mr. Essayli also took aim at the state’s announcement. “Getting fraudsters after they’ve stolen hundreds of millions of dollars is not good enough,” he said, as quoted by The Times. “The fraud should never have happened in the first place.”
Mr. Bonta, in turn, said federal officials had not acknowledged his office’s role in their case, including, he said, the arrest by state investigators of one of the principal defendants, the surgeon accused in the artery-procedure scheme. “We are one of the state partners. That was a joint investigation that we were a part of,” he said, according to The Times. The Times reported that Mr. Essayli had thanked state and local partners without naming them. Mr. Bonta called it part of a pattern of “improper politicization and weaponization” of fraud investigations, while crediting rank-and-file federal agents.
Why it matters in Sacramento
The exchange is the latest round in a contest between the Trump administration and California over who polices the state’s health programs, and it comes as federal money for those programs is in question.
On Tuesday, the administration said it would defer an additional $1.2 billion in federal Medicaid reimbursements for the state’s personal care services, the category that includes In-Home Supportive Services, citing the program’s growth rather than specific evidence of fraud, as The Inquirer reported. Earlier this month, the state auditor found that the Department of Health Care Services’ own software had flagged about 28,000 Medi-Cal providers as high risk and that the department followed up on about 2,000.
For the attorney general’s office, the cases are also a demonstration of capacity. Its fraud division receives 75 percent of its funding from the federal Department of Health and Human Services, a grant of about $85.9 million for the federal fiscal year that began Oct. 1, with the state covering the remaining $28.6 million, according to the announcement.
The dispute also has an electoral dimension. Mr. Bonta, a Democrat, faces the Republican Michael Gates, a former Huntington Beach city attorney and former Justice Department civil rights official, in the Nov. 3 election, according to Ballotpedia and The Times’s voter guide.
What comes next
The state’s 103 cases will proceed separately from the federal prosecutions. For the Bay Area counties that administer In-Home Supportive Services locally and help pay for it, the more consequential question may be in Washington: whether federal Medicaid officials release the deferred reimbursements, or seek to recover them, as their review of the program continues.
The attorney general’s office asked residents with information about suspected fraud in the program to report it through its online complaint form or its toll-free line, (800) 722-0432.
Graham Ostrowski covers the governor, the Legislature, state agencies and the state budget for the Sacramento Report. More from Graham Ostrowski
