An independent journalist has done what years of state oversight in New York apparently could not: expose a taxpayer-funded fraud operation worth an estimated $190 million, hiding in plain sight inside a single Queens neighborhood. The investigation, led by citizen journalist Nick Shirley, has sent shockwaves through Washington and reignited a national debate over waste, fraud, and abuse inside Medicaid and Medicare.
Shirley and his crew spent weeks combing through publicly available federal healthcare billing data before descending on Flushing, Queens, home to the densest cluster of social adult day care centers anywhere in the country. According to federal figures, 64 such facilities are packed into a single one-mile radius. What Shirley found when he started asking basic questions was a system seemingly built for exploitation.
In one now viral confrontation, Shirley walked into a Flushing adult day care center armed with nothing more than public Centers for Medicare and Medicaid Services data. That data showed the facility had 7,899 registered members and had billed taxpayers approximately 12.9 million dollars in a single year. When Shirley asked an employee whether the facility actually served that many people, the answer was an immediate denial. “No, we don’t have 7,000 members,” the employee insisted, before ordering Shirley off the property.
The math simply does not add up, and that is precisely the point Shirley has been hammering home. These centers are billing the government roughly 1,600 dollars per patient. If a facility could not conceivably house or serve thousands of people, yet claims to have done so, taxpayers are the ones left footing an enormous and fraudulent bill.
Shirley released a full 53-minute unedited video documenting his team’s on-the-ground investigation. In it, he visits multiple facilities, questions operators face to face about billing irregularities, transportation reimbursement claims, and alleged illegal kickbacks paid to seniors simply for showing up and enrolling.
The pattern he documented again and again was strikingly consistent: no one willing to explain who actually owns the business, staff who had only just been hired within the past month, and billing volumes that would require serving thousands of patients a facility could not physically accommodate.
“No one knows who the owner is. Everyone hired in the past month. Impossible to bill for 8,000 patients. 100% fraud,” Shirley summarized in his own blunt assessment, a conclusion that reads less like a hedge and more like a closing argument.
The reaction from prominent conservative voices was swift and full-throated. Project Veritas founder James O’Keefe called the investigation “legendary reporting.” Fox News White House correspondent Kevin Corke said the scheme uncovered was likely just “the tip of the iceberg,” a warning that should trouble every American taxpayer footing the bill for Medicaid nationwide.
What makes this story sting even more is that it took a citizen journalist with a camera and a laptop to do what government watchdogs and legacy media outlets failed to accomplish for years.
The billing data Shirley used was public. It was available to any reporter willing to spend the time digging through it. Yet it took an independent investigator, not a taxpayer-funded regulator or a major network newsroom, to finally connect the dots and confront the people responsible.
This is not the first time the adult day care industry in New York has been caught up in fraud allegations, and it will almost certainly not be the last. Federal prosecutors in Brooklyn recently charged two Queens men, Inwoo Kim and Daniel Lee, with running a decade-long scheme that allegedly bilked Medicare and Medicaid out of approximately 120 million dollars.
According to the Justice Department, Kim owned a pharmacy along with two adult day care centers, Royal Adult Daycare and Happy Life, while Lee served as program director at one of them.
Court documents allege the two men paid cash kickbacks and supermarket gift cards to lure elderly Medicaid and Medicare recipients into enrolling, then billed the government for services that were never actually provided. Text messages cited in the complaint show Kim allegedly instructing a co-conspirator to “give the 10,000 dollars to the Korean members first,” a chilling glimpse into how casually these operators treated taxpayer money as a personal slush fund for bribery.
Investigators say the scheme was so brazen that claims were submitted for more patients than the facilities could physically hold. Medicaid alone reportedly paid Kim’s day care businesses 62 million dollars, while Medicare paid his pharmacy another 58 million dollars for prescription drugs, much of it tied to services and medications that were never rendered.
The broader numbers paint an alarming national picture. Medicaid paid adult day care providers 3.35 billion dollars nationwide in 2024 alone, and a staggering 17 percent of that money flowed to just 375 facilities scattered across New York State, more than any other state in the country.
Spending on these programs in New York has nearly quadrupled since 2018, a growth curve that should have set off alarm bells years ago inside Kathy Hochul’s Department of Health.
CMS Administrator Dr. Mehmet Oz has been blunt about the scale of the problem, personally joining Shirley in New York to confront operators of suspected fraud schemes. Oz and his team visited elderly day care centers and medical equipment companies, uncovering what he described as major red flags, including three separate medical supply companies allegedly operating out of a single apartment with no visible inventory whatsoever.
“It begs the question: how many social adult daycare centers do you need?” Oz asked pointedly, a question that gets to the heart of why federal investigators are now taking a hard look at whether the explosive growth of these facilities reflects legitimate need or simply reflects how easy it has become to defraud the system.
Oz has not minced words about which states bear responsibility for allowing this waste to metastasize. He has specifically called out New York, along with Minnesota and California, for allowing fraud and abuse to run rampant under their watch.
Under the Trump administration, Oz has vowed that taxpayer dollars will no longer be stolen while state officials look the other way, and he has threatened to cut off federal payments to states that fail to clean up their own programs.
New York state officials, for their part, insist they have taken action. A spokesperson for the state Department of Health pointed out that since 2021 the agency has referred 387 centers for investigation, with about a third of those elevated to the state attorney general’s office for potential law enforcement action. Whether that represents a serious crackdown or a token gesture in the face of a multibillion dollar problem is a fair question for New York taxpayers to ask their elected officials.
This is hardly an isolated New York phenomenon either. A separate CBS News investigation earlier this year uncovered an extreme concentration of taxpayer-funded hospices in Los Angeles County, with hundreds of hospice offices showing multiple red flags for fraud. California prosecutors eventually filed charges against 21 suspects in a hospice fraud scheme that state Attorney General Rob Bonta said had defrauded the state of 267 million dollars.
The House Energy and Commerce Committee has since expanded its own Medicaid fraud probe to include New York as part of a ten-state investigation. Committee chairman Brett Guthrie put it plainly: fraud should not be a partisan issue because it is the most vulnerable Americans, elderly and disabled patients being used as pawns in these schemes, who are put at the greatest risk by fraudsters siphoning off resources meant for their actual care.
