Feds Charge 15 in Nearly $2 Billion Los Angeles Health Care Fraud Takedown

Federal prosecutors on Thursday charged 15 people, including six medical professionals, in a series of Los Angeles-area health care fraud schemes that the Justice Department said produced more than $1.8 billion in fraudulent claims.

The largest case accounts for more than $1.6 billion billed to private insurers for alleged sham substance abuse treatment, which the department called the biggest case of its type it has ever prosecuted.

Eight defendants were arrested Thursday, six of them expected in federal court in Los Angeles and two in Texas. The U.S. Attorney’s Office put the combined alleged losses near $2 billion.

“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,” said Assistant Attorney General Colin M. McDonald.

In the addiction-treatment case, prosecutors allege a Los Angeles father and son, Nathan and David Young, controlled dozens of treatment companies and used “body brokers” to recruit unhoused people and members of recovery support groups.

Recruits were allegedly offered free flights, money, hotel stays, cars and even drugs. Prosecutors say patients were recycled through facilities to keep billing insurance, and drugged “to knock the client out” if they tried to leave.

So-called therapy, the government says, often consisted of Zoom sessions with more than 100 attendees, where patients only had to turn on their cameras. Two Texas residents, Honey and Cody Phipps, are charged alongside the Youngs.

A separate indictment accuses surgeon Dr. Harold Tabaie and chiropractor Hany Malek of a $135 million scheme to bill Medicare for unnecessary atherectomies, which use a bladed catheter to clear plaque from arteries.

Prosecutors allege Malek posed as a medical doctor to diagnose patients and that some procedures left patients in extreme pain. The department said data analytics flagged Tabaie as an extreme national outlier in billing for the procedure.

Three other cases target hospice operators accused of billing Medicare more than $138 million for patients who were not terminally ill. One hospice allegedly had a non-death discharge rate near 85 percent.

A Whittier woman was also indicted in a nearly $270 million scheme to bill Medi-Cal, California’s Medicaid program, for bogus prescriptions. Prosecutors say it exploited a suspension of prior-authorization rules.

“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 U.S. Attorney Bill Essayli.

Essayli also called it “the worst type of fraud because you have doctors who have sworn an oath to do no harm,” CBS Los Angeles reported.

FBI Director Kash Patel credited President Trump and the White House Task Force to Eliminate Fraud, chaired by Vice President JD Vance, saying, “stealing from American taxpayers will no longer be tolerated in this country.”

The Justice Department noted that an indictment is merely an allegation and that all defendants are presumed innocent until proven guilty in court.

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