Medicare Fraud Scheme Targeted Hospice Patients, Lawsuit Alleges

Case Overview: A class action lawsuit alleges a California-based network of healthcare and hospice providers carried out a sweeping Medicare fraud scheme involving false claims for unnecessary or fabricated wound care services.

Consumers Affected: ACO-affiliated physicians impacted by alleged fraudulent billing, and potentially hospice patients for whom services were improperly billed.

Court: United States District Court for the Central District of California

A California-based network of healthcare and hospice providers is accused of carrying out a sweeping Medicare fraud scheme involving false claims for unnecessary or fabricated wound care services, according to a new lawsuit.

Dr. Alex Foxman filed a complaint against Wellness Mobile Clinics, Inc., The Wound Pros, OC Health Wellness Group Corporation, and affiliated hospices, including Sunset Hospice Services, Inc. and Allstate Care Hospice, Inc. 

The complaint alleges that these organizations submitted fraudulent claims for costly procedures such as wound debridement and biologic grafts. Many of the targeted patients were already receiving hospice care, where such treatments are either medically inappropriate or not covered.

According to Foxman, the services were billed without approval from the patients’ primary care physicians. This violates Medicare protocols under the REACH Accountable Care Organization (ACO) shared-risk model, which can penalize doctors for avoidable patient spending.

The lawsuit also claims the companies used physicians’ National Provider Identifiers without permission to legitimize the claims. It describes the billing as a coordinated effort to divert funds from Medicare.

Wellness Mobile Clinics Accused of Fabricated Wound Care Claims

Foxman, a board-certified physician and head of Mobile Physicians, discovered the scheme after reviewing Medicare records for one of his long-time patients, an 83-year-old hospice enrollee referred to as Jane Doe. He had provided care to her since 2019, and says he was never informed when entities began billing Medicare in 2023 and 2024 for high-cost wound procedures allegedly administered to her.

Jane Doe suffers from advanced dementia, paralysis, and heart failure, which are typically managed through comfort-focused hospice care. Yet records revealed multiple claims for biologic skin grafts using products like CarePatch and Derm-Maxx, which Foxman says were never ordered, medically necessary, or even performed.

When Foxman requested supporting records from the companies, he says he received incomplete and inconsistent documentation, some listing clinicians who had never seen the patient. Because he participates in the REACH ACO model, Foxman was financially penalized for the inflated spending, despite having no involvement in the billed treatments.

Widespread Billing Scheme Allegedly Exploited Patients

The lawsuit paints the picture of a broader fraudulent operation involving physicians, physician assistants, hospice administrators, and billing staff. Foxman alleges the companies engaged in phantom billing, duplicate claims, and credential misuse, submitting inflated charges through shell entities and false vendor agreements.

Hospice organizations such as Sunset Hospice and Allstate Care Hospice are accused of enabling or ignoring the false claims, in violation of hospice care standards. By exploiting patients within ACOs, the companies allegedly shifted inflated costs onto physicians, undermining Medicare’s efforts to incentivize cost-efficient care.

Fraud and Scams Plague Health and Hospice Care Industries

Several recent high-profile legal cases highlight ongoing challenges with Medicaid and Medicare fraud, collusion, and abusive practices within the healthcare industry. 

In California, two residents pled guilty to orchestrating a scheme that defrauded Medicare of nearly $16 million by operating sham hospice companies. They used personal information from foreign nationals and deceased doctors to submit false claims for hospice services that were never provided or medically necessary, laundering proceeds through a web of fake entities.  

In 2017, Chemed Corporation and its subsidiaries, including Vitas Hospice Services—the nation’s largest for-profit hospice provider—agreed to a $75 million settlement resolving allegations they submitted false claims for hospice services, violating the False Claims Act. 

Meanwhile, concerns over collusion have emerged in pharmacy benefit management. A class action lawsuit filed by the AIDS Healthcare Foundation accuses GoodRx and five major pharmacy benefit managers of coordinating to rig reimbursements and suppress payments to independent pharmacies through a pricing manipulation program. This alleged price-fixing harms small pharmacies, reduces patient choice, and increases healthcare costs. 

In his lawsuit, Foxman wants to represent other ACO-affiliated physicians impacted by similar fraudulent billing. The lawsuit seeks damages, restitution, and court orders to stop the scheme and recover losses tied to the alleged misconduct by suing for violations of the Federal False Claims Act through illegally submitting false or fraudulent claims to the federal government for payment or approval, and other state and federal laws.

Case Details

• Lawsuit: The United States of America Ex. Rel. Alex Foxman, M.D. v. Wellness Mobile Clinics, Inc., et al.
• Case Number: 2:25-cv-06542 
• Court: United States District Court for the Central District of California 

Plaintiffs' Attorneys

• Della Shaker (West Hollywood Law Group)

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