California Sees Surge in 'Ghosts' Clinics and Daycares Amid Fraud Fears

Regulators raise alarms over suspicious activity in hospice care and subsidized childcare programs

Mar. 19, 2026 at 12:59am

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California's safety net programs are under increased scrutiny as federal regulators report a wave of newly created hospice agencies in the state triggering widespread concern, with many stripped of their ability to bill Medicare after suspicious activity surfaced. Investigators have also drawn attention to the state's subsidized childcare system, raising questions about facilities that appear inactive or inconsistent with their reported enrollment.

Why it matters

The findings have intensified concerns that complex reimbursement systems, moving large sums of public money, may be vulnerable to abuse if oversight fails to keep pace. Officials say enforcement efforts are increasing, particularly in hospice care, where fraud risks have been under review for years.

The details

Federal regulators say they have described dense clusters of hospice providers packed into tight areas in Los Angeles, sometimes with multiple companies tied to a single address. Site visits to some of those locations have reportedly revealed little more than empty offices, disconnected phones and unattended mail. The concerns center on whether some operators are enrolling ineligible patients or billing for care that isn't being delivered, turning a program intended for end-of-life support into a potential avenue for improper payments. Scrutiny is also spreading beyond hospice care, with an investigation drawing attention to California's subsidized childcare system and raising questions about facilities that appear inactive or inconsistent with their reported enrollment.

  • Federal regulators have been reviewing the surge of newly created hospice agencies in California for the past several years.
  • The investigation into California's subsidized childcare system was conducted in 2026.

The players

Federal Regulators

Overseeing the Medicare program and investigating suspicious activity in California's hospice care industry.

Mehmet Oz

Has pointed to unusually high concentrations of hospice providers in parts of Los Angeles and called for closer oversight.

California State Leaders

Have cautioned against broad conclusions in the childcare cases, noting that not all irregularities indicate intentional wrongdoing.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident

What’s next

Officials say enforcement efforts are increasing, particularly in hospice care, where fraud risks have been under review for years.

The takeaway

The findings have intensified concerns that complex reimbursement systems, moving large sums of public money, may be vulnerable to abuse if oversight fails to keep pace. With significant taxpayer funding involved, pressure is mounting to ensure these programs are operating as intended and reaching the people they're meant to serve.