California Gov. Gavin Newsom is facing renewed scrutiny after Trump administration officials demanded that the state repay approximately $1.3 billion in Medicaid funds tied to healthcare coverage for illegal aliens.
Fox News reported this week that audits directed by Dr. Mehmet Oz, administrator of the Centers for Medicare & Medicaid Services, found that several states submitted improper reimbursement claims for routine and elective medical procedures that are expressly prohibited under federal Medicaid regulations. Auditors concluded that approximately $1.4 billion in improper Medicaid payments must be repaid, with California responsible for the vast majority. (RELATED: Washington’s Fraud Factory)
The review determined that the claims covered standard medical care rather than emergency treatment, placing them outside what federal Medicaid law allows. Federal law limits Medicaid spending on illegal aliens to emergency treatment only, yet auditors found that states billed federal taxpayers for routine, non-emergency medical care that should have been covered exclusively with state funds. (RELATED: How Medicaid Made a Billion-Dollar Crime Inevitable
In an interview with the Epoch Times this week, Dr. Oz stressed the severity of the fraud in California, “What we’re seeing in Minnesota, which is billions of dollars of fraud that hurts our most vulnerable people and puts them at risk … is dwarfed by what I saw in California, which is wholescale cultural malfeasance around health care.” Oz continued, “There is an acceptance that you need to be in the fraud business, especially in Los Angeles. The magnitude of fraud there, we believe, is approximately $4 billion just in hospice and home healthcare.”
Oz went on to explain that the issue is bigger than just California, “There’s many groups that are penetrating our healthcare system to steal money from us who are not native-born Americans, and many of them aren’t U.S. citizens…. When the Department of Justice goes after some of these groups…[such as] earlier this year in 2025 [regarding] a $15 billion Russian mafia sting, most of the perpetrators had escaped back to Russia. So, it’s an effort by other countries to take advantage of our healthcare system.”
Bill Essayli, first assistant U.S. attorney for the Central District of California, has criticized Gavin Newsom harshly, calling him the “king of fraud.” On an episode of Fox & Friends on Jan. 8, Essayli remarked, “California has spent $24 billion in the last five years on homelessness, and no one can account for where that money has really gone.” (RELATED: Is Minnesota or California the Fraud Capital of America?)
Newsom’s administration disputes the audit’s conclusions as “false,” arguing that federal officials relied on inflated figures that do not accurately reflect how the funds were used. A bold advocate of “universal healthcare regardless of immigration status,” Newson has repeatedly defended the expansion of Medi-Cal as both a moral and economic success. In May of 2025, he proposed a freeze on new enrollments on Medi-Cal for illegal aliens, which took effect on Jan. 1 of this year.
In his final State of the State address, Newsom said, “We are proving that expanding human rights works. We are proving that legal immigration works. And we’re proving that a progressive tax structure works.”
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