The purpose of this study is to characterize the different results obtained when analyzing health inequalities data in which individuals are nested within their neighborhoods and a single level model is used to characterize risk rather than a multilevel model. The inability of single level models to characterize between neighborhood variance in risk may affect the level of risk attributed to black race if blacks are differentially distributed in high risk neighborhoods. The research replicates in Los Angeles an approach applied by a different group of researchers in Massachusetts (Subramanian, Chen, Rehkopf, Waterman, & Krieger, 2005). Single level and multilevel models were used to analyze Los Angeles County, California, US all-cause mortality data for the years 1989-1991, modeled as 29,936 cells (deaths and population denominators cross-tabulated by age, gender, and race/ethnicity) nested within 1552 census tracts. Overall blacks had 1.27 times the risk of mortality compared to whites. However, multilevel models demonstrated considerable between census tract variance in mortality for both blacks and whites which was partially explained by neighborhood poverty. Comparing the results of equivalent single level and multilevel models, the mortality odds ratio for blacks compared to the white reference group reversed itself, indicating greater risk for blacks in the single level model and lower risk in the multilevel model. Adding an area based socioeconomic measure (ABSM) to the single level model reduced but did not remove the discrepancy. Predictions of mortality risk for the interaction of race and age group demonstrate that all single level models exaggerated the mortality risk associated with black race. We conclude that characterizing health inequalities in mortality for blacks using single level models, which do not account for the cross level interaction created by the greater likelihood of black residence in neighborhoods where the risk of mortality is greater regardless of race, can exaggerate the risk of mortality attributable to the individual level effects of black race.