We've seen several stories about this topic in the past two weeks. There were a couple of good ones by CBS News and another video put together by Nick Shirley. Yesterday the Los Angeles Daily News weighed in with their own report about a place in Van Nuys that is offering "virtual offices" to these sketchy hospice businesses.
A group operating out of a Friar Street office building in Van Nuys that advertises “virtual offices” incorporated 22 hospices and home care agencies in one year, including 15 hospices registered in one day to a single suite, according to an investigation by the Southern California News Group.
The 15 hospices, all formed in “Suite 205” at 14545 Friar St., later collected $12.3 million from Medicare and Medi-Cal billings in 2023 and 2024, records showed...
While operating out of the same building is permitted, hospices cannot use the same office, according to Sheila Clark, the president and CEO of California Hospice and Palliative Care Association.
How did they get away with this if it's flatly illegal? According to the story, each of the new businesses was given a letter to add to the suite number, suggesting they had their own distinct space in the office. But the suites in this building have a maximum of three rooms so there's no way to have 15 or 20 businesses legitimately operating out of this space. These particular agencies were created back in 2020 and have since moved around, but the signs of fraud are obvious.
Most of the 15 hospices, all incorporated on June 18, 2020, have relocated and changed hands since then, but significant overlap existed among the agencies for years, with several hospices listing the same phone numbers, owners and key personnel. A state report indicated at least one patient was shifted between two of the businesses...
Three of the hospices were later involuntarily decertified by CMS.
One, originally located in Suite 205-G before moving to Granada Hills, allegedly assigned terminal illnesses to patients who were not, in fact, dying. The hospice could not provide “evidence their licensed providers were qualified and trained to provide hospice services to eight of eight sample patients,” according to a statement of deficiencies.
The daughter of a 77-year-old woman, identified as Patient 9, told inspectors she had not consented to any hospice services.
“Patient 9 was observed to be walking without assistance, verbally responsive and speaks mostly Spanish and responds to English, needed frequent staff redirection, denied pain, and was not in any respiratory distress noted,” the inspector wrote.
The business records behind these agencies are just as sketchy as the offices. One person whose name was listed on the documents creating these agencies claimed they had all be sold and he had nothing to do with them. If it's true, that's also illegal.
Arsen Der-Aprahamian, a business broker whose name appeared on initial incorporation records for five of the 15 hospices, said the businesses were flipped and that he is no longer associated with any of them...
Several, including three hospices that billed Medicare, still listed his name or phone number in databases maintained by state and federal regulators. He was listed as the person who filed the annual paperwork for one of the hospices in 2024.
Der-Aprahamian hung up shortly into the interview...
A CMS spokesperson said applications for Medicare enrollment require individuals to certify that they are legitimately associated with the provider. A hospice could have its enrollment denied or revoked “for providing false or misleading information.”
State officials have known this problem existed for years but efforts to shut these agencies down seem to have moved pretty slowly. The story says 280 licenses have been revoked in the past two years, but that's out of more than 1,800 such agencies, most of which are probably fraudulent. At the current pace it will take a decade to shut down the existing fraud.
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