15 Charged in Los Angeles Health Care Fraud Takedown, With $2 Billion in Claims Alleged

The Justice Department announced on Thursday that 15 people, including six medical professionals, have been charged in Los Angeles in a set of health care fraud schemes that billed government and private health care programs about $2 billion. Eight of the defendants were arrested on Thursday.

The cases cover four kinds of alleged fraud: sham substance abuse treatment, artery procedures that patients did not need, hospice care for patients who were not terminally ill, and pharmacy claims for prescriptions that were never real. Prosecutors say the money came out of Medicare, Medi-Cal, California's Medicaid program, and private insurance.

The rehab case is the largest of its kind

The biggest case accuses Nathan Young, 39, and his father David Young, 71, both of Los Angeles, along with Honey Phipps, 42, and Cody Phipps, 36, both of Greenville, Texas. Prosecutors say the group trafficked vulnerable patients from around the country to Southern California and elsewhere for sham substance abuse treatment, and billed private insurance companies more than $1.6 billion. The Justice Department called it the largest case of its type it has ever prosecuted.

The Youngs controlled dozens of companies that claimed to offer substance abuse treatment in the Los Angeles area and around the country, prosecutors say. They directed recruiters known as body brokers, including the Phipps defendants, to target people who were homeless, people living in poverty, and people attending substance abuse support groups.

The case is not the first time the Young operation has faced accusations. Aetna sued Nathan Young and his companies for $40 million in 2023, accusing them of cycling patients through sober living homes to keep billing insurers.

Unneeded artery procedures that injured patients

A second case charges Hany Malek, 61, a chiropractor from Tarzana, and Harold Tabaie, 78, a cardiothoracic surgeon from Anaheim, with billing Medicare $134 million for atherectomy procedures that patients did not need. An atherectomy uses a bladed catheter to clear plaque from arteries. Prosecutors say the procedures injured patients.

Fox 11 Los Angeles reported that Malek posed as a medical doctor, diagnosed patients with arterial disease they did not have, and sent them to Tabaie, who performed the procedures at two clinics the men co-owned. Some patients received the procedure again after an earlier one had failed, and were left with lasting pain, officials said.

Hospice and pharmacy claims

Prosecutors also charged three hospice fraud schemes that billed Medicare more than $138 million for patients who were not terminally ill. A separate case in the same announcement covers a $270 million scheme to defraud Medi-Cal with pharmacy claims for bogus prescriptions.

"It is especially egregious when doctors and other health care professionals, who pledged to do no harm, resort to petty greed and criminality," said First Assistant United States Attorney Bill Essayli.

Five of the defendants arrested on Thursday were expected to appear that afternoon in United States District Court in downtown Los Angeles. Two were expected in the Northern District of Texas, and one in the Northern District of Illinois.

The charges are allegations. The defendants are presumed innocent unless prosecutors prove the cases in court.