Federal prosecutors charged 15 people in Southern California with health care fraud, accusing them of billing Medicare and private insurers more than $1.8 billion for care patients did not need or never got.
Story Highlights
- Federal agents made predawn arrests across Southern California on Thursday, October 22, as the Justice Department charged 15 people, six of them medical professionals.
- The biggest case is a $1.6 billion rehab scheme that prosecutors say lured addicts from across the country.
- A surgeon and a chiropractor are accused in a $135 million scheme over needless artery procedures.
- Other cases target fake hospice care, kickbacks, pharmacy billing and the illegal sale of drug samples.
- Prosecutors say the two billed Medicare about $135 million for procedures patients did not need, and that the chiropractor posed as a medical doctor.
Federal Takedown Targets Alleged $1.8 Billion Fraud
The Justice Department said the schemes produced more than $1.8 billion in fraudulent claims to government and private health plans. Prosecutors say the money was meant for real patients and real care. Instead, they say, it paid for sham addiction treatment, artery procedures that patients did not need, and hospice care for people who were not dying. Hospice is end-of-life care for patients expected to live six months or less.
The FBI said agents and partners made eight arrests and charged seven more people after a years-long investigation. The IRS, the Drug Enforcement Administration and the inspector general’s office at the Department of Health and Human Services also worked the case. First Assistant U.S. Attorney Bill Essayli, the second-ranking federal prosecutor in Los Angeles, said the cases involve billions of dollars in intended losses. The Justice Department stressed that the charges are allegations and that every defendant is presumed innocent unless proven guilty in court.
The $1.6 Billion Rehab Case
The largest case targets a father and son from Los Angeles, Nathan Young, 39, and David Young, 71. Prosecutors say they ran sham treatment companies that billed private insurers about $1.6 billion. Two “body brokers” from Greenville, Texas, Honey Phipps, 42, and Cody Phipps, 36, are accused of recruiting the patients. A body broker is someone paid a kickback to steer insured people to a certain rehab center.
Prosecutors say addicts were brought from across the nation to dozens of Los Angeles rehab centers, where little or no real treatment was given. They say patients were cycled through the facilities again and again so the billing could continue. According to prosecutors, staff were told to sedate patients who tried to leave, and patients were cut off from family, kept from their belongings and blocked from walking out. A manager of the Young facilities, Nicholas Moore, 33, has pleaded guilty and admitted helping submit $199 million in false claims.
Details on the Artery Procedure Case
Another case centers on atherectomy, a procedure that clears plaque from inside an artery. Dr. Harold Tabaie, 78, a heart and chest surgeon from Anaheim, and Hany Malek, 61, a chiropractor from Tarzana, are charged by indictment. Prosecutors say the two billed Medicare about $135 million for procedures patients did not need at two clinics, West Regional Cardio Thoracic and Vascular Surgeons and Angelus Medical Clinic Multi Specialty Group.
Both men face four counts of health care fraud. Malek also faces two counts of bank fraud tied to a pandemic-era Paycheck Protection Program loan, and prosecutors say he posed as a medical doctor. The indictment also accuses the pair of paying kickbacks and billing under other doctors’ names. Officials said data analysis first flagged the billing.
Fake Hospice, Kickbacks and Who Pays
Three hospice cases add up to about $138 million in billing, prosecutors say. Dr. Richard Keech, 83, of Torrance, a hospice medical director, is accused of signing false papers saying patients were terminally ill. Two doctors are accused of taking cash for each patient to order genetic tests patients did not need. A Whittier woman is accused in a pharmacy scheme that billed Medi-Cal, California’s health program for low-income residents, about $270 million. A Walnut doctor is accused of selling drug samples, including Ozempic and Mounjaro, to pharmacy owners.
The costs of fraud land on everyone who pays into the system. Medicare is funded by workers and retirees, and private insurers pass losses on through higher premiums. FBI Director Kash Patel pointed to the $1.8 billion in losses and the arrests in announcing the takedown. The defendants’ responses were not included in the official announcements.
Why This Matters for Families and Seniors
Health care fraud hits seniors on Medicare first and hardest. Every fake claim drains money meant for honest doctors and real patients. In the rehab case, prosecutors say the people harmed were men and women already fighting addiction, who came looking for help. Officials from the health department’s inspector general’s office said those who exploit patients will be held accountable.
The cases move next to federal court in Los Angeles, Texas and Illinois, where the defendants arrested on October 22 were set to appear. Prosecutors will have to prove each charge. If they do, judges will decide the sentences and how much money must be paid back.
Sources:
foxnews.com, justice.gov, justice.gov (Central District of California), justice.gov (Tabaie and Malek case)
