Hidden Fees: Taxpayers on the Hook for Foreign-Linked Health Care Fraud Schemes
This story is the second in an ongoing series on the Cost of Fraud, as Open the Books tallies the hidden fees on American tax returns. Click here to read the first story on fraudulent autism billings.
In January 2026, Centers for Medicare and Medicaid Services Administrator Dr. Mehmet Oz alleged that roughly $3.5 billion worth of fraud, so far unconfirmed, was happening through false hospice billings in a scheme he attributed in large part to what he called the “Russian Armenian mafia.”
So, Open the Books took a look at Oz’s claims, what fraud could be confirmed, and its cost to taxpayers.
It turns out Russian and Armenian-linked fraud has cost taxpayers almost $1 billion in confirmed losses from Medicare and Medicaid, part of a Department of Justice operation dubbed “Operation Gold Rush.” These schemes become a hidden fee on America’s tax returns; this example carries a price tag of $7 per household, according to Federal Reserve data.
Open the Books’ cost-per-household estimates for fraud reflect only confirmed cases; the true cost is likely far higher.
Operation Gold Rush
In June 2025, the Department of Justice announced charges against members of a transnational crime organization who had submitted an eye-popping $10.6 billion in fraudulent billings through medical supply companies they’d acquired. They successfully drew down $941 million from federal taxpayers, or $7 per household.
“Operation Gold Rush,” part of the National Health Care Fraud Takedown, is the largest health care fraud case ever charged by the Justice Department based on the amount of lost tax dollars. A coordinated law enforcement operation led to the indictment of 11 members of a transnational criminal organization involved in a multi-billion-dollar scheme. They purchased dozens of durable medical equipment (DME) companies and submitted the false Medicare claims by stealing the identities of more than one million Americans in all 50 states.
Federal officials prevented them from receiving the vast majority of the money, but the fraud nonetheless resulted in approximately $900 million from Medicare supplemental insurers and $41 million directly from Medicare. The government has seized roughly $27.7 million, under 3% of what was paid out, in fraud proceeds.
The $7 hidden fee on our tax returns does not include the cost of enforcement or the cost to prosecute.
NOTE: In the past, foreign-linked schemes to defraud Medicaid and Medicare programs have seen defendants use their loot on luxury shopping sprees rather than to funding care or easing costs for American families. Taxpayers have footed the bill unknowingly for bad actors’ cruise trips; Jimmy Choo, Prada and Burberry swag; and tech from the Apple store. The latter instance carried an $11,700 price tag adjusted for inflation. That’s two to three months of housing, food and transportation expenses for the average American household.
Ground Zero for Health Care Fraud?
In January 2026, CMS Administrator Oz claimed that roughly $3.5 billion worth of fraud is taking place in Los Angeles County, which he calls the “epicenter for health care fraud in America.” In a four-block area in the Van Nuys neighborhood, there are 42 hospices and, he said, “it’s run, quite a bit of it, by the Russian Armenian mafia.”
If Oz is correct, it would amount to $25.97 per household in wasted tax money.
His allegations, still unproven by the Department of Justice but included in their $14 billion running “attempted fraud” estimate, are largely against hospice centers and home health care businesses. But his viral post led to a sharp drop in business for one local bakery whose signage appeared in the background of the video. Sherman Way Marketplace owner Movses Bislamyan said customer traffic fell 30% in a single day but insists the family-owned business has nothing to do with the criminal claims.
The Details
Standing outside a Van Nuys business complex in a video posted to X.com, Oz described a $16 million fraud operation based out of an office on the second floor. “If you look at it, it’s pretty [non]ndescript, there wasn’t anyone really in there, they weren’t doing any services. They just got an address they could claim was a hospice and then they ran the business claiming people are at home getting services which they’re really weren’t.”
Of the wider fraud epidemic, Oz said:
“This is an organized crime, you know, mafia deal. You’ve got folks who are systemically recruiting doctors to write false prescriptions, you know, hundreds of doctors participating. They’ve got a hundred thousand patients who they’ve tricked or paid to give them their beneficiary numbers so they can perpetuate the fraud. And then the criminals are just running the whole organization and quickly scurrying away when law enforcement does get around to prosecuting them. Unfortunately, in California, there has not been a lot of attention on these problems. That’s going to change.”
When fraudsters siphon funds or even successfully submit large waves of false claims, the response can indirectly lead to legitimate patients facing tighter restrictions due to more bureaucracy, higher compliance costs, and larger premiums or taxes in the long run.
California Medicaid: By the Numbers
Because hospice companies, both legitimate and illegitimate, would reasonably make claims under any number of billing codes for different forms of care, it’s difficult to tally the exact amount of taxpayer cash in play. However, a recent data dump from Centers for Medicare and Medicaid Services (CMS) from 2018-2024 offers some perspective.
Key billing codes for hospice care are G0299 (care from a Registered Nurse in a home or hospice setting) and G0300 (care from a Licensed Nurse Practitioner in a home or hospice setting). Over that time, $822,484,769.10 was billed to those two codes in MediCal (California’s Medicaid program) alone.
Durable medical equipment, the focus of the Medicare fraud found in Operation Gold Rush, is a broad category that covers billing codes for everything from walkers and canes to respiratory equipment, infusion pumps and even hospital beds. While itemized Medicare spending is unavailable, the corresponding Medicaid data released by CMS demonstrates the scope of such spending (billing codes E0100-E8002). From 2018-2024, $807,418,922 was billed to those codes in California. Monthly billing peaked in March 2024 at $13,196,503.26.
More broadly, California billed over $127 billion ($127,651,196,790) to Medicaid in the years 2018-24. Los Angeles County billed more than $20 billion worth ($20,322,094,908). In Van Nuys alone, businesses billed Medicaid nearly a billion dollars ($916,370,840.60). Again, these figures don’t even include Medicare and its potential fraudulent claims.
Medicaid spending in California has soared 147% in just a few years.
Billing in Van Nuys similarly soared from $90,341,066.35 in 2018 to $167,147,404.10 in 2024. That’s 185% higher.
Click here to download more data on Medicaid billings by city in California.
FLASHBACK: Luxury Goods on the Taxpayer Dime
Back in 2013, 49 defendants, all of whom were current or former Russian diplomats or the spouses of diplomats, were criminally charged for a 9-year scam to illegally obtain nearly half a million dollars in Medicaid benefits.
In general, the defendants underreported their income below or at the Medicaid eligibility level to qualify for benefits, even submitting letters signed by employees of the Russian Mission to the United Nations, the Russian Federation Consulate General in New York, or the Trade Representation of the Russian Federation in the USA to corroborate the falsified income. One set of defendants even failed to disclose their marriage, instead claiming that they were brother and sister.
To celebrate their seemingly successful scheme, they spent tens of thousands of dollars on cruise vacations and luxury shopping sprees at Tiffany & Co., Jimmy Choo, Prada, Bloomingdale’s, Burberry, and Swarovski.
One of their $8,400 purchases from Apple in 2012 would be roughly $11,700 today, translating to roughly two to three months of housing, food, and transportation costs for the average U.S. household — let alone covering the bill for legitimate Medicare and Medicaid patients.
There is no clear record of prosecutions of the 49 defendants, as only 11 were still in the United States. Diplomatic immunity shielded them from U.S. courts, where authorities could rely on expulsion rather than incarceration.
Conclusion
The federal government has been cautious about foreign schemes that defraud taxpayer-funded health care for years, but not cautious enough to nip them in the bud. These transnational crimes are the tip of the iceberg.
Through a multiagency effort dubbed a National Health Care Fraud Takedown, which includes Operation Gold Rush, the Department of Justice has charged 324 individuals with all manner of fraud totaling a staggering $14.6 billion in “intended loss.”
Of those individuals, “29 defendants were charged for their roles in transnational criminal organizations alleged to have submitted over $12 billion in fraudulent claims to America’s health insurance programs.”
The cases of alleged fraud range from telemedicine to genetic testing to opioid trafficking and more, with defendants of varied backgrounds.
The total cost of all that fraud and would-be fraud? Taxpayers were exposed to $108.95 in wasted taxes per household.
FURTHER READING
Hidden Fees: Federal Taxpayers on the Hook for Autism Fraud Through Medicaid