Rufo Identifies More Fraud in California

The NY Post has a new story by Christopher Rubo and Kenneth Schrupp which delves into yet another source of fraud in California’s budget. Previously, Rufo has covered EDD fraud, Medi-Cal fraud and welfare fraud including food stamps. Others have covered the serious problem of hospice fraud, with LA County being the top site for hospice fraud in the nation.

Today, Rufo is focused on In-Home Supportive Services Program (IHSS) which is a California program administered through Medi-Cal that pays people to care for the elderly and disabled at home.

On the surface, IHSS presents itself as an instrument of compassion, directing billions to caregivers who help with cooking, personal care, laundry, and other daily needs inside recipients’ homes.

But a growing number of experts and critics argue that the program is rife with fraud, losing roughly an estimated $6 billion to $12 billion yearly to scammers.

The program stated in 1973 and has long been criticized as rife with fraud. In 2009, Gov. Schwarzenegger estimated 25% of the claims were fraudulent.

“IHSS provider” has become the largest low-wage occupation statewide, with more than 800,000 taxpayer-funded caregivers offering everything from grocery shopping to personal care. 

The system operates largely on trust. Providers self-report their timecards and check-in records. In roughly 60% of cases, providers and beneficiaries live together…

According to the state’s Department of Social Services, for one 12-month period between 2023 and 2024, counties received nearly 7,000 fraud complaints; 28 counties recorded 964 fraud investigations, resulting in just 39 cases prosecuted. 

California, in other words, is sending billions of dollars per year to a program that is easy to exploit, difficult to administer, and almost impossible to supervise.

Why hasn’t the state done more to crack down on this type of fraud. Rufo argues there is no incentive to do so because the unions who thrive on this program donate lots of money to the Democrats who fund it.

Perhaps the biggest beneficiaries of California’s IHSS program are labor unions, which have enrolled more than 600,000 IHSS providers. Two leading unions for the state’s in-home care workforce, SEIU Local 2015 and United Domestic Workers (UDW), collectively raked in more than $149 million in dues in 2024. Both have a direct stake in the program’s expansion, since every new IHSS worker is a potential dues-paying member.

These unions are some of the most powerful institutions in California politics and collectively send millions of dollars to the state’s Democratic establishment. SEIU Local 2015 contributed $2 million to Newsom’s anti-recall campaign; spent another $2 million in favor of Proposition 50, a measure to redraw the state’s congressional districts in favor of Democrats; and donated over $90,000 to Newsom across his two campaign years. UDW donated $20,000 to Newsom’s 2022 reelection campaign. Both unions have contributed heavily to Democrats.

SEIU Local 2015 and United Domestic Workers of America have also allegedly used coercive tactics to expand their membership. Nathan Vu, a caregiver in San Diego, says that UDW pressured him to join during his IHSS orientation in February 2024. Though he says he declined, the union allegedly began deducting dues from his paycheck anyway.

“I vividly remember not wanting to enroll in the union,” Vu said. “I specifically said no.” Vu says he told UDW to stop deducting dues and demanded that they provide a copy of his membership agreement and proof of authorization. UDW, he claims, provided neither, and kept deducting dues for a full year before terminating his membership.

There is obviously going to be fraud in a program run like this. Indeed, there are some demographic hints that fraud is rampant in certain communities.

California’s 799,379 taxpayer-funded IHSS providers are paid an estimated $2,170.27 per month, making IHSS provider — according to federal occupational data — the most common job in the state. 

“We’ve seen in different communities across the entire state, there is a disproportionate number who are actually on IHSS,” said Tangipa, referencing TCS’s findings that, according to state IHHS data and federal Census data, nearly one in three Armenians in Los Angeles County appear to be enrolled as providers or recipients in the program…

Newsom’s office called TCS’s earlier inquiries about IHSS being the state’s main driver of jobs growth a case of “California Derangement Syndrome.”

Gov. Newsom in particular could do something about rampant fraud in this program but clearly benefits from it.

Governor Newsom is responsible for all the main components of the IHSS operation: he oversees the program, the enforcement, and, effectively, the Public Employment Relations Board. He has no incentive to crack down on a program that is enriching his most powerful allies, and, according to coauthor Schrupp’s reporting, is responsible for more than 40 percent of the net jobs created during his administration. And so, the system expands.

This is how things work in a state where one-party makes all the decisions and is only accountable to itself. There is simply no upside to looking out for taxpayers that compares to creating a slush fund for allies.

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