Los Angeles, California — Federal authorities have charged 15 people, including six medical professionals, in a sweeping health care fraud crackdown involving approximately $2 billion in alleged fraudulent claims, according to the U.S. Department of Justice.
The cases involve alleged schemes connected to addiction treatment centers, unnecessary medical procedures, hospice services, genetic testing, prescription drugs and illegal kickbacks. Authorities announced the charges Thursday, October 22, with eight defendants arrested in connection with several investigations.
Prosecutors say the cases include an alleged addiction treatment fraud operation involving more than $1.6 billion in claims submitted to private insurance companies. Other allegations involve Medicare claims for unnecessary artery procedures and hospice services provided to people who were not terminally ill.
The charges remain allegations, and defendants are presumed innocent unless proven guilty in court.
Addiction Treatment Scheme Involved More Than $1.6 Billion in Claims
One of the largest cases centers on an alleged yearslong operation involving substance abuse treatment companies that prosecutors say submitted more than $1.6 billion in claims to private insurers.
Nathan Young, 39, and his father, David Young, 71, both of Los Angeles, allegedly controlled dozens of substance abuse treatment businesses involved in the operation. Two Texas residents, Honey Phipps, 42, and Cody Phipps, 36, are also charged in connection with the alleged scheme.
According to prosecutors, recruiters known as “body brokers” targeted vulnerable people across the country, including individuals experiencing homelessness, poverty or substance abuse. They allegedly offered free flights, hotel stays, apartments, cash, vehicles, drugs and other incentives to persuade people to travel to Southern California for treatment.
Once patients arrived, their accommodations and treatment allegedly depended on the value of their insurance coverage. Some reportedly received luxury accommodations, while others were housed in overcrowded and unsanitary properties described in the indictment as “trap houses.”
Prosecutors allege that patients were repeatedly transferred between treatment facilities to generate additional insurance payments, regardless of whether the services were medically necessary or actually provided.
In some instances, patients who attempted to leave were allegedly drugged, isolated from family members or physically prevented from departing. The indictment alleges that the Youngs directed employees to administer medication “to knock the client out” when patients tried to leave.
Patients were also allegedly encouraged to consume drugs or alcohol to qualify for additional detoxification services. Some purported therapy sessions reportedly consisted of Zoom calls involving more than 100 participants, with little required beyond turning on their cameras.
Nicholas Moore, 33, of North Myrtle Beach, North Carolina, has pleaded guilty in connection with the alleged operation. Prosecutors said he admitted helping submit approximately $199 million in fraudulent insurance claims.
Doctors Accused of Unnecessary Artery Procedures
Another case involves an alleged $135 million Medicare fraud scheme centered on invasive artery procedures that prosecutors say some patients did not medically need.
Dr. Harold Tabaie, 78, of Anaheim, and Hany Malek, 61, of Tarzana, allegedly operated two clinics in the Los Angeles area where patients underwent atherectomies. These procedures use specialized catheters to remove plaque from arteries.
According to the indictment, Malek allegedly posed as a medical doctor and diagnosed patients with arterial disease before recommending procedures performed by Tabaie.
Prosecutors allege that some patients underwent procedures despite having no arterial disease, while others received repeated treatments that had previously been unsuccessful. Some patients reportedly experienced extreme pain and discomfort.
Investigators said data analysis identified Tabaie as an extreme outlier in the number of atherectomy procedures billed nationwide.
The defendants also allegedly offered groceries, gift cards, transportation and utility payments to encourage patients to seek treatment at their clinics.
Hospice Providers Accused of Filing Millions in False Claims
Federal prosecutors also announced cases involving more than $138 million in allegedly fraudulent Medicare hospice claims for patients who were not terminally ill.
In one case, Geoffrey Jimenez, 60, of Los Angeles, allegedly recruited seniors at community centers by promising free medical services without clearly informing them that they were being enrolled in hospice care.
Some beneficiaries reportedly discovered their enrollment only after receiving communications from Medicare or their primary care physicians.
Prosecutors said Jimenez’s hospice operation billed Medicare approximately $9.8 million. More than a dozen additional hospice entities he allegedly controlled submitted over $107 million in similar claims.
In a separate case, Dr. Richard Keech, 83, of Torrance, is accused of falsely certifying that Medicare beneficiaries were terminally ill, resulting in more than $10 million in allegedly fraudulent claims.
Armani Raffi, 59, of Van Nuys, is accused of orchestrating a $21 million hospice fraud scheme involving four providers in Sherman Oaks. Prosecutors allege that some patients were enrolled in hospice without their knowledge, disrupting their legitimate medical care.
Genetic Testing and Prescription Fraud Also Under Investigation
The crackdown extends beyond addiction treatment and hospice services.
Hassan Badday, 48, of Los Angeles, and Robby Ayoub, 52, of Huntington Beach, are accused of accepting illegal kickbacks in exchange for authorizing medically unnecessary genetic testing. Prosecutors allege that a laboratory marketer collected DNA samples from Medicare patients in exchange for payments.
Christina Mareik, 61, of Whittier, faces charges connected to an alleged prescription fraud scheme involving nearly $270 million in Medi-Cal claims. Prosecutors allege the operation exploited a temporary suspension of prior authorization requirements to submit fraudulent pharmacy claims.
Thomas Steven Mladinich, 38, of Newport Beach, is accused of receiving between $150,000 and $250,000 in illegal referral payments for directing patients to an addiction treatment facility.
Dejun Wang, 62, a physician from Walnut, is separately charged with illegally selling prescription drug samples, including Ozempic and Mounjaro, to pharmacies in the San Gabriel Valley.
Federal Agencies Continue Health Care Fraud Enforcement
The investigations involved multiple federal agencies, including the FBI, Drug Enforcement Administration and IRS Criminal Investigation, according to federal officials.
Five of the eight defendants arrested Thursday were expected to make initial court appearances in downtown Los Angeles, while the remaining three were expected to appear in federal courts in Texas and Illinois.
First Assistant U.S. Attorney Bill Essayli criticized the alleged conduct in a statement, saying, “It is especially egregious when doctors and other health care professionals, who pledged to do no harm, resort to petty greed and criminality.”
He added, “Every dollar drained out of our private and public health insurance systems is one less dollar available to those who truly need it.”
The cases highlight the range of alleged fraud schemes federal investigators are pursuing, from questionable medical procedures and false hospice claims to the alleged exploitation of vulnerable patients.
As the legal proceedings move forward, the allegations will be examined in court, where prosecutors must establish the charges against each defendant.
What concerns you most about these allegations involving health care providers and vulnerable patients? Share your thoughts in the comments below.
