BUSTED: California Ordered to Return $1+ BILLION After Dr. Oz–Led Audit Exposes Federal Healthcare Funds Spent on Illegal Immigrants

The Trump administration has dropped the hammer on California and a coalition of deep-blue states after a sweeping federal audit uncovered more than $1.3 billion in misused federal healthcare funds spent on non-emergency medical care for illegal immigrants, a clear violation of federal law.

According to a bombshell report highlighted on Fox News, the administration’s aggressive audits, led by Administrator for the Centers for Medicare & Medicaid Services Dr. Mehmet Oz, found that seven states and Washington, D.C., improperly billed the federal government for healthcare services that go far beyond what is legally permitted.

Under federal law, states may only use federal Medicaid funds to cover emergency medical services for illegal immigrants. Routine care, elective procedures, and non-emergency treatments must be paid for by the states themselves.

That did not happen.

Assistant U.S. Attorney for the Central District of California Bill Essayli wrote on X, “California must return more than $1 billion to the federal government after an audit by Dr. Oz and his team uncovered federal dollars being spent on healthcare for illegal immigrants. We are teaming up to combat healthcare fraud so the money can be used for American citizens who need it!”

Federal auditors identified nearly $1.4 billion owed back to U.S. taxpayers, with California alone accounting for the overwhelming majority:

• California: ~$1.3 billion
• New York: ~$30.7 million
• Illinois: ~$29.8 million
• Minnesota: ~$12.7 million
• Oregon: ~$5.4 million
• Washington: ~$2.3 million
• Washington, D.C.: ~$2.1 million
• Colorado: ~$1.5 million
• TOTAL: ~$1.394 billion

These funds were billed to the federal government for routine medical care, not emergencies, an explicit violation of Medicaid rules.

California officials predictably denied wrongdoing, claiming the state “routinely reimburses” the federal government. But the audit findings directly contradict those claims—and the financial damage is already done.

Governor Gavin Newsom has long championed “universal healthcare regardless of immigration status,” proudly expanding taxpayer-funded care to the state’s entire undocumented population.

WATCH:

California must return more than $1 billion to the federal government after an audit by @DrOzCMS and his team uncovered federal dollars being spent on healthcare for illegal immigrants. We are teaming up to combat healthcare fraud so the money can be used for American citizens… pic.twitter.com/YWgwQg7XBZ

— F.A. United States Attorney Bill Essayli (@USAttyEssayli) January 19, 2026