Operation Never Say Die: Federal Hospice Fraud Arrests and CMS Payment Suspensions
Eight defendants arrested in “Operation Never Say Die.” The U.S. Attorney’s Office for the Central District of California, in coordination with the Vice President’s Task Force to Eliminate Fraud, has charged 11 defendants in connection with more than $50 million in alleged health care fraud. Simultaneously, CMS has suspended 221 hospice and home health providers in the Los Angeles area. Providers who receive a CMS payment suspension notice face both an immediate administrative crisis and a potential parallel criminal investigation.
Operation Never Say Die: The April 2026 Federal Hospice Fraud Takedown
On April 2, 2026, DOJ arrested eight defendants and charged 11 total in “Operation Never Say Die,” alleging more than $50 million in hospice and health care fraud losses in the Central District of California. Five cases target sham hospice operators who enrolled patients without terminal diagnoses and paid cash kickbacks for referrals.
CMS simultaneously suspended 221 hospice and home health providers in Los Angeles, a 215% increase in one week. Providers who receive a fraud-based payment suspension under 42 C.F.R. section 405.371 have 15 days to submit a written rebuttal. There is no formal appeal. Statements made during the rebuttal are not privileged and can be used in a parallel criminal proceeding.
Federal officials have stated that additional coordinated takedowns will occur in clusters throughout 2026. CMS plans to review every California hospice by year’s end. The same enforcement tools are being directed at home health agencies nationwide.
On April 2, 2026, federal agents arrested eight defendants across Southern California and Idaho in a coordinated takedown of alleged hospice and health care fraud schemes. The U.S. Attorney’s Office for the Central District of California announced the arrests under the name “Operation Never Say Die.” The defendants include three nurses, a psychologist, and a chiropractor. The charged conduct spans more than $50 million in alleged losses to Medicare and private health care plans.
Five of the cases target hospice operators in Glendale, Artesia, Tarzana, Chatsworth, and Simi Valley. Each case follows the same core theory: hospice companies enrolled patients who were not terminally ill, paid kickbacks for patient referrals, and billed Medicare for services that were never medically necessary or never provided.
The operation was conducted in coordination with the Vice President’s Task Force to Eliminate Fraud. First Assistant United States Attorney Bill Essayli called California a “kingdom of fraud.” CMS Administrator Dr. Mehmet Oz announced plans to review every hospice in California by the end of the year.
Operation Never Say Die is the first wave, not the last. Federal officials have said that coordinated takedowns will occur in clusters throughout 2026, and the same AI-driven billing analytics and payment suspension tools now aimed at hospice operators will be directed at home health agencies with equal force.
The Federal Charges: Case-by-Case Breakdown
The charging documents filed in the Central District of California follow a common template for healthcare fraud cases: each hospice enrolled patients who did not qualify for the benefit, paid cash kickbacks to generate referrals, and billed Medicare for services that were not medically necessary or not provided.
Topanga Hospice Care (Artesia)
A licensed vocational nurse was charged with health care fraud for operating Topanga Hospice Care Inc. The government alleges that from July 2020 to April 2025, this facility submitted more than $9.1 million in fraudulent hospice claims to Medicare. Medicare paid more than $8.5 million. One married couple told investigators they were approached at a market and promised $300 per month in cash if they enrolled. Neither had a terminal illness. Their physician confirmed it. The facility had a non-death discharge rate of approximately 85%. The national average is 17.2%.
The Topanga case illustrates why data analytics are central to both the prosecution and the defense in hospice fraud cases. The 85% non-death discharge rate is the prosecution’s headline statistic. It is a powerful number. When nearly all of a hospice’s patients leave alive, the inference is that those patients were never terminally ill to begin with. The government uses CMS billing data, live discharge rates, average length of stay, and geographic clustering of beneficiary addresses to build its case before interviewing a single patient.
But the same data that supports an indictment can also support a defense. Non-death discharge rates are aggregate statistics. They do not prove that any individual patient was ineligible. A high discharge rate can reflect legitimate clinical factors, including patients who stabilized on hospice care, patients who elected to revoke the benefit, or patients whose conditions improved in ways that were not predictable at the time of certification. The defense burden is to contextualize these numbers at the individual patient level and to challenge the government’s use of statistical outliers as a proxy for criminal intent.
626 Hospice / St. Francis Palliative Care (Glendale)
A psychologist and his wife, a registered nurse, were charged with health care fraud for operating a Glendale hospice. The government alleges they submitted more than $5.2 million in fraudulent claims. Medicare paid more than $4 million. The couple allegedly paid kickbacks for patient referrals, billed for services that were not medically necessary or not provided, and laundered the proceeds through personal expenses including mortgage payments, car payments, and international travel. The FBI, HHS-OIG, IRS Criminal Investigation, and the FDA are investigating.
The kickback allegations in the 626 Hospice case add a critical dimension for the defense. When the government alleges both false claims and kickback violations, the Anti-Kickback Statute operates as a plus factor that fundamentally changes the defense posture. In a pure medical necessity case, the defense can contest whether each patient met the eligibility standard. That is a clinical question. But when the government can show that patient referrals were driven by cash payments rather than clinical need, the eligibility argument loses much of its force. Kickback evidence allows federal prosecutors to argue that every claim to Medicare was tainted from the outset of the covered service.
The defense response is to attack the government’s proof on both fronts. Showing that a patient was clinically eligible is not enough if the government can prove the referral was purchased. The defense must dismantle the government’s evidence on the clinical question and on the financial relationship that generated the referral. Evidence that a payment arrangement was structured to comply with a recognized Anti-Kickback Statute safe harbor, or that the defendant had a good-faith belief that it did, directly undercuts the government’s burden of proving that the defendant acted knowingly and willfully.
Three Glendale Hospices Operated by a Thrice-Convicted Fraudster
An 11-count indictment charges two defendants with opening three fraudulent Glendale hospice facilities while the lead defendant was legally barred from participating in Medicare. That defendant, a three-time convicted health care fraudster currently incarcerated in federal prison, is alleged to have operated the companies through her husband as a nominal owner. The defendants submitted at least $4.8 million in fraudulent claims and received at least $4.2 million in Medicare payments. One of the hospice companies was opened while the lead defendant was free on bond awaiting a prior hospice fraud trial.
Comfort Choice Hospice (Tarzana)
A licensed vocational nurse was charged with health care fraud for operating Comfort Choice Hospice Inc. From January 2022 to September 2025, the government alleges the facility submitted hundreds of fraudulent claims for hospice services to dozens of patients who were not terminally ill. Comfort Choice sought more than $3.8 million. Medicare paid approximately $3.4 million. The defendant allegedly paid kickbacks to marketers for patient referrals in violation of the Anti-Kickback Statute.
Valley Pacific Hospice (Simi Valley)
The CEO and CFO of Valley Pacific Hospice Inc. was charged with health care fraud. The company’s Medicare enrollment was revoked in August 2024. In 2022, its live discharge rate exceeded 75%. CMS audited 18 claims and determined the company had a pattern and practice of submitting claims that failed to meet Medicare hospice standards. The defendant also allegedly forged a physician’s signature on Medicare enrollment forms. Valley Pacific billed Medicare more than $580,000 and was paid more than $526,000.
“The defendants arrested this morning who are charged with stealing millions of dollars of health care benefits got caught and now face years in federal prison.”
— First Assistant United States Attorney Bill Essayli, Central District of CaliforniaThe CMS Payment Suspension Wave
The criminal arrests are only one dimension of this enforcement action. Simultaneously, CMS has suspended 221 hospice and home health providers in the Los Angeles area. That number is a 215% increase from the 70 providers suspended just one week earlier. Federal officials have stated the number will continue to grow.
A CMS payment suspension is an administrative action. It is not a criminal charge. But it can be devastating to a provider’s operations. And critically, it may signal that a parallel criminal investigation is underway.
How CMS Payment Suspensions Work
CMS has authority to suspend Medicare payments under 42 C.F.R. section 405.371. Two distinct grounds exist. First, CMS may suspend payments if it possesses reliable information that an overpayment exists or that the payments being made may not be correct. Second, in cases of suspected fraud, CMS may suspend payments after consulting with the HHS Office of Inspector General and, as appropriate, the Department of Justice, if CMS determines that a credible allegation of fraud exists.
The distinction matters. A suspension based on a credible allegation of fraud is not subject to the same time limits as a standard overpayment suspension. There is no 180-day limitation on the initial suspension period when fraud is alleged. CMS reevaluates every 180 days, but it may continue the suspension as long as the fraud investigation remains active. And in the current enforcement environment, these investigations are active for extended periods.
Prior Notice Is Not Required in Fraud Cases
Under 42 C.F.R. section 405.372, CMS may impose a payment suspension without prior notice if it determines the Medicare Trust Funds would be harmed by giving notice. In cases involving credible allegations of fraud, CMS itself, in consultation with OIG and DOJ, determines whether to impose the suspension and whether prior notice is appropriate. CMS directs the Medicare contractor on timing and content of any notification. CMS is the real party in interest.
This means a hospice operator can receive a suspension notice with no advance warning. Revenue stops. The provider then has a narrow window to respond.
The Rebuttal Process
When a provider receives a payment suspension notice, the regulations provide a right to submit a written rebuttal statement. Under section 405.372(b), the provider has 15 days from the suspension notice to submit a rebuttal indicating why the suspension should be removed. The rebuttal should include all evidence the provider considers pertinent.
This is not an appeal. There is no formal administrative appeal mechanism for a Medicare payment suspension. The rebuttal is the provider’s primary procedural tool. CMS reviews the rebuttal, any supporting documentation, and all other relevant information, and then determines whether the suspension should be removed, modified, or continued. CMS must issue its determination within 15 days of receiving the complete rebuttal package.
In practice, few fraud-based suspensions are lifted at the rebuttal stage. The rebuttal nonetheless serves critical functions. It creates a record. It identifies the provider’s position. And it may narrow or shape the scope of what follows.
The Intersection of Administrative and Criminal Proceedings
The April 2026 enforcement action illustrates the pattern that former DOJ Fraud Section prosecutors understand from the government side. CMS and DOJ coordinate their actions. A payment suspension by CMS frequently runs in parallel with a criminal investigation by DOJ or HHS-OIG. The 221 provider suspensions in Los Angeles were announced the same day as the criminal arrests.
A provider who receives a CMS payment suspension notice in this environment is not facing a billing dispute.
That provider may be the subject of a parallel criminal investigation. Statements made to CMS or its contractors during the suspension rebuttal process are not privileged. They can be used in a subsequent criminal proceeding. Documents submitted as part of the rebuttal become part of the administrative record, which federal law enforcement can access.
This is the core problem for providers. The rebuttal process demands a rapid, substantive written response. But a criminal investigation demands careful attention to Fifth Amendment protections and the potential that any statement, explanation, or document production will be scrutinized by federal prosecutors.
The 15-Day Deadline Creates a Strategic Dilemma
The 15-day rebuttal window creates immediate pressure. Providers who respond without counsel risk making statements that become evidence in a criminal case. Providers who remain silent forfeit their primary administrative remedy. Navigating this tension requires understanding both the regulatory framework and the likely trajectory of the criminal investigation, including whether the rebuttal process may be feeding a parallel federal healthcare fraud investigation.
Charges and Penalties in Federal Hospice Fraud Prosecutions
The charges in Operation Never Say Die reflect the standard playbook in federal hospice fraud cases. Each count carries its own statutory maximum. The government layers charges to maximize sentencing exposure and forfeiture potential.
In the 626 Hospice case, the government specifically alleges that the defendants laundered fraud proceeds through mortgage payments, car payments, international flights, and personal bills. Money laundering charges expand both sentencing exposure and the government’s ability to pursue forfeiture of any asset traceable to fraud proceeds.
What Federal Enforcement Officials Are Signaling
Federal officials are making their enforcement trajectory explicit. CMS Administrator Oz stated that federal officials plan to review every hospice in California by year’s end. Authorities expect “clusters” of similar takedowns every few months throughout 2026. The DOJ Health Care Fraud Data Fusion Center, announced in June 2025, is combining CMS billing data with HHS-OIG investigative data and AI-driven analytics to identify billing outliers across the country.
This enforcement is not limited to California. Hospice fraud prosecutions are active in Florida, Texas, Ohio, Georgia, and Arizona. CMS has placed newly enrolling hospices in all six of those states under a Provisional Period of Enhanced Oversight. The Vice President’s Task Force has stated that the fraud initiative will continue to audit high-billing hospice agencies nationwide.
Home Health Agencies Face the Same Scrutiny
Hospice providers are not the only at-home care operators in the crosshairs. About 18% of the nation’s total home health and hospice Medicare billing activity originates from Los Angeles County alone. CMS has not drawn a distinction between hospice and home health billing anomalies in its enforcement posture. The 221 provider suspensions in the Los Angeles area include both hospice and home health agencies. For a detailed analysis of the federal enforcement landscape facing home health operators, see our home health fraud enforcement and defense overview.
CMS has a track record of using enrollment moratoria against home health agencies in high-fraud areas. The agency imposed its first Affordable Care Act enrollment moratorium on Miami-area home health agencies in 2013, and it has extended geographic moratoria to other markets since then. In February 2026, CMS imposed a nationwide six-month moratorium on new Medicare enrollment for certain DMEPOS suppliers, citing billions of dollars in suspected fraudulent billing. HHS Secretary Robert F. Kennedy Jr. described the shift as moving from a “pay and chase” model to a “detect and deploy” strategy. CMS has added seven billing codes to its required prior authorization list, making prior authorization a condition of payment effective April 2026. Home health agencies that bill Medicare should expect the same data-driven scrutiny, prepayment review, and suspension risk that hospice providers are now experiencing.
For operators, marketers, certifying physicians, and referral sources across both hospice and home health, the signal is clear. At-home care fraud enforcement has been elevated to a national priority with dedicated federal resources.
Frequently Asked Questions
What is the standard for Medicare hospice eligibility, and why does it matter in fraud cases?
Medicare hospice benefits are available only to patients whom a physician has certified as having a terminal illness with a life expectancy of six months or less if the illness runs its normal course. See 42 U.S.C. section 1395f(a)(7); 42 C.F.R. section 418.22. The central theory in most federal hospice fraud prosecutions is that operators systematically enrolled patients who did not meet this standard. In every hospice case charged in Operation Never Say Die, the government alleges that beneficiaries were not terminally ill. Non-death discharge rates far above the national average serve as statistical evidence supporting this theory.
How does DOJ use data analytics to identify hospice fraud targets?
DOJ’s Health Care Fraud Data Fusion Center, announced in the June 2025 National Health Care Fraud Takedown, combines CMS billing data with HHS-OIG investigative data and AI-driven analytics to identify billing outliers. For hospices, the system flags high live discharge rates, extended lengths of stay, concentrated general inpatient care billing, atypical referral patterns, and rapid enrollment growth. The Valley Pacific case in Operation Never Say Die illustrates this approach: CMS audited 18 claims and identified a pattern and practice of submitting claims that failed to meet hospice standards. That audit led to Medicare enrollment revocation and, ultimately, criminal charges.
What role do kickback payments play in federal hospice fraud prosecutions?
The Anti-Kickback Statute prohibits any payment to induce patient referrals to a provider that submits claims to a federal health care program. In the Operation Never Say Die cases, multiple defendants are alleged to have paid cash kickbacks to patients and marketers. In the Topanga Hospice case, a married couple received $300 per month in cash in envelopes for six months after enrolling. Kickback payments to patients, marketers, and referring physicians are a standard charging theory in hospice fraud cases. A kickback violation can independently support criminal health care fraud charges under 18 U.S.C. section 1347 because claims generated through purchased referrals are treated as inherently fraudulent by federal prosecutors. For a detailed analysis of the statute, its safe harbors, and available defenses, see our Anti-Kickback Statute defense overview.
What is the Provisional Period of Enhanced Oversight, and which states are affected?
The Provisional Period of Enhanced Oversight is a CMS program that places newly enrolling hospices and hospices undergoing ownership changes under heightened scrutiny in designated states. As of 2026, PPEO applies in Arizona, California, Nevada, Texas, Georgia, and Ohio. Hospices subject to PPEO face increased pre-payment review of claims and an elevated risk of referral to HHS-OIG and DOJ. CMS has revoked billing privileges for 122 operators in those states. PPEO does not mean a criminal investigation has been opened. But it does place the provider under active CMS scrutiny, which may independently lead to a fraud referral.
Can certifying physicians be charged as co-defendants in hospice fraud cases?
Yes. Certifying physicians are routinely named as co-defendants alongside hospice operators. The government charges physicians who signed certifications of terminal illness without clinical basis, or in exchange for compensation, under 18 U.S.C. section 1347 (health care fraud), the Anti-Kickback Statute, and conspiracy statutes. The government’s theory does not require proof that the physician personally submitted a claim. It is sufficient that the physician signed certifications knowing those certifications would be used to generate Medicare claims. In November 2025, four California defendants, including physicians, were sentenced to federal prison for their roles in a $16 million hospice fraud and money laundering scheme.
What is a CMS payment suspension based on credible allegations of fraud?
Under 42 C.F.R. section 405.371(a)(2), CMS may suspend Medicare payments to a provider when CMS has consulted with the HHS Office of Inspector General and, as appropriate, the Department of Justice, and determined that a credible allegation of fraud exists. Unlike a standard overpayment suspension, a fraud-based suspension is not subject to the standard 180-day time limit. CMS must reevaluate the suspension every 180 days and obtain certification from OIG or other law enforcement that the investigation remains active. But the suspension may continue for 18 months or longer. The suspension can be imposed in whole or in part, meaning CMS may freeze all Medicare payments or a percentage of them.
What rights does a hospice provider have when it receives a payment suspension notice?
The regulations provide a right to submit a written rebuttal statement within 15 days of the suspension notice. Under 42 C.F.R. section 405.372(b), the rebuttal should explain why the provider believes the suspension should be removed and include any pertinent evidence. CMS must respond within 15 days of receiving the complete rebuttal package. However, there is no formal administrative appeal mechanism for a payment suspension. The rebuttal is not a hearing. It is a written submission. CMS reviews it internally and issues a determination to continue, modify, or remove the suspension. In fraud-based suspensions, CMS itself is the real party in interest and makes the final decision.
Can a CMS payment suspension be imposed without prior notice to the provider?
Yes. Under 42 C.F.R. section 405.372(a)(3), a payment suspension may be imposed without prior notice if CMS determines that the Medicare Trust Funds would be harmed by giving prior notice. In fraud cases specifically, section 405.372(a)(4) provides that CMS, in consultation with OIG and DOJ, determines whether to impose the suspension and whether prior notice is appropriate. CMS directs the Medicare contractor on the timing and content of the notification. This means a provider can have payments frozen before receiving any written communication explaining the basis for the suspension.
Can a hospice provider face both a CMS payment suspension and criminal charges simultaneously?
Yes. The April 2026 enforcement action demonstrates this directly. CMS suspended 221 providers in the same week that DOJ filed criminal charges against 11 defendants. Federal law permits CMS and DOJ to coordinate their enforcement actions. A payment suspension based on credible allegations of fraud under section 405.371(a)(2) requires CMS to consult with OIG and DOJ before imposing the suspension. That consultation process means DOJ is aware of the suspension and may already have an active criminal investigation. Statements made during the rebuttal process are not privileged and can be used in a criminal proceeding.
What happens to suspended Medicare payments if a provider is ultimately cleared?
Under 42 C.F.R. section 405.372(e), suspended payments are first applied to reduce or eliminate any overpayment determined by the Medicare contractor or CMS, including accrued interest. They are then applied to reduce any other obligation to CMS or HHS. Only after these obligations are satisfied are excess funds released to the provider. If CMS determines that no overpayment exists and no other obligations are outstanding, the full amount of suspended payments is released. However, in fraud-based suspensions that last for extended periods, the cash flow disruption alone can force providers into closure before any final determination is reached.
Where does Armstrong & Bradylyons PLLC defend hospice fraud cases and CMS payment suspensions?
Armstrong & Bradylyons PLLC defends hospice executives, owners, certifying physicians, marketers, and referral sources in federal hospice fraud investigations and CMS payment suspension proceedings nationwide. Scott Armstrong and Drew Bradylyons each spent years at DOJ’s Fraud Section prosecuting complex healthcare fraud cases, including schemes involving hospice providers, kickback arrangements, and false certifications. That experience includes direct knowledge of how DOJ coordinates with CMS on payment suspensions, how HHS-OIG investigative referrals become criminal cases, and how data analytics are used to select prosecution targets. Special Counsel Andrea Savdie also served for four years as a Trial Attorney in the Fraud Section’s Healthcare Fraud Unit at the Miami Strike Force.
The firm’s attorneys have over 25 years of combined DOJ experience and participated in 25 federal jury trials, including 17 in healthcare fraud cases involving over $2.8 billion in alleged false claims. DOJ’s Health Care Fraud Strike Force operates in the Southern District of Florida, the Eastern District of Michigan, the Southern District of Texas, the Central District of California, the District of Massachusetts, the Northern District of Illinois, and additional federal districts. Hospice fraud prosecutions also originate from U.S. Attorney’s Offices beyond the Strike Force footprint. The firm is based in Washington, D.C. and is prepared to defend clients in every federal district where DOJ brings healthcare fraud and Anti-Kickback Statute cases.
