Federal prosecutors have charged 15 people, including six medical professionals, in health care fraud schemes that allegedly produced about $2 billion in false claims, among them what the Justice Department called the largest substance abuse treatment fraud it has ever prosecuted.
The charges, announced Oct. 22, involve sham addiction treatment, unnecessary artery procedures that allegedly injured patients and hospice care billed for people who were not terminally ill. Eight defendants were arrested that day and were expected to appear in federal courts in Los Angeles, Texas and Illinois.
“Our message is simple: if you steal health care dollars from the American taxpayer or abuse your position to harm patients, we are coming for you — and the data will lead us to you,” said Assistant Attorney General Colin M. McDonald of the department’s National Fraud Enforcement Division.
The largest case accuses David Young, 71, and his son, Nathan Young, 39, both of Los Angeles, of controlling dozens of purported treatment companies that billed private insurers more than $1.6 billion. Honey Phipps, 42, and Cody Phipps, 36, both of Greenville, Texas, are accused of working as “body brokers” who recruited patients for the Youngs.
According to the indictment, the defendants targeted people who were homeless or poor and those attending addiction support groups. They allegedly lured patients to Southern California with free flights, cash, housing, cars and drugs, and sought out people with the most generous insurance, often enrolling them in policies they were not eligible for.
Some patients with high-paying coverage allegedly stayed in hotels and private apartments, while others were packed into crowded, unsanitary homes described as “trap houses.” Prosecutors say the Youngs directed that patients who tried to leave be drugged — “to knock the client out” — and cut them off from their families.
Employees allegedly coached patients to fake symptoms to qualify for detox, and some were encouraged to use drugs or alcohol to become eligible. The therapy billed to insurers allegedly consisted of Zoom sessions with more than 100 people, who had to do little more than turn on their cameras and were told they could lie on the beach.
The four face charges including conspiracy to commit health care fraud and wire fraud, and violating the Eliminating Kickbacks in Recovery Act. A fifth man, Nicholas Moore, 33, of North Myrtle Beach, North Carolina, has pleaded guilty to conspiracy, admitting he helped submit $199 million in fraudulent claims as an area manager for several Young facilities.
“By diverting critical funding from a vulnerable community, the accused stripped away a vital lifeline for those seeking addiction recovery support,” said David Olesky, special agent in charge of the Drug Enforcement Administration’s Los Angeles Field Division.
In another case, Dr. Harold Tabaie, 78, an Anaheim cardiothoracic surgeon, and his business partner, Hany Malek, 61, a Tarzana chiropractor, are accused of billing Medicare about $135 million for unnecessary atherectomies, in which a bladed catheter is used to clear plaque from arteries.
Prosecutors allege Malek posed as a medical doctor and diagnosed arterial disease, and Tabaie then operated on patients whose arteries were not diseased, some of whom suffered extreme pain. The case surfaced after data analytics flagged Tabaie as an extreme outlier nationwide for the procedure. Malek also faces bank fraud charges tied to a Paycheck Protection Program loan.
“It is especially egregious when doctors and other health care professionals, who pledged to do no harm, resort to petty greed and criminality,” said Bilal “Bill” Essayli, first assistant U.S. attorney for the Central District of California.
Three hospice cases allege more than $138 million in Medicare billing for patients who were not terminally ill. Geoffrey Jimenez, 60, of Los Angeles, is accused of running Transitions Hospice, where roughly 85% of patients were discharged alive — more than four times the national average. Prosecutors say he also controlled more than a dozen other hospices that billed over $107 million.
Dr. Richard Keech, 83, of Torrance, is accused of falsely certifying patients as terminally ill, causing more than $10 million in claims. Armani Raffi, 59, of Van Nuys, is accused of running four Sherman Oaks hospices that submitted about $21 million in false claims.
Christina Mareik, 61, of Whittier, was indicted in a nearly $270 million scheme to bill Medi-Cal, California’s Medicaid program, for unnecessary prescriptions after being charged by complaint in June. Two doctors, Hassan Badday, 48, of Los Angeles, and Robby Ayoub, 52, of Huntington Beach, are accused of taking kickbacks to sign genetic testing orders.
Thomas Steven Mladinich, 38, of Newport Beach, is charged with taking kickbacks for referring patients to a rehab facility. Dejun Wang, 62, a Walnut physician, is accused of selling prescription drug samples, including Ozempic and Mounjaro, to San Gabriel Valley pharmacy owners who repackaged and dispensed them to customers.
The Justice Department’s Health Care Fraud Strike Force Program has charged more than 6,200 defendants accused of billing more than $45 billion since 2007.
The charges are allegations, and all defendants are presumed innocent until proven guilty.
Edited by SMDP Staff