Feds Uncover $2 Billion Health Care Fraud Schemes With A Cruel Catch For Patients

The Justice Department announced charges Thursday against 15 people in a Los Angeles-area health care fraud bust involving about $2 billion in fraudulent claims for sham substance abuse treatment, unnecessary artery procedures, and bogus hospice care.

The defendants include six medical professionals. The DOJ said it arrested eight on Thursday.

“The charges today span the full range of health care fraud that has taken root in California and across the country: substance abuse treatment fraud, medically unnecessary surgical procedures, kickback driven genetic testing, and hospice fraud,” said Assistant Attorney General Colin McDonald, the head of the department’s National Fraud Enforcement Division. 

Four of the defendants were accused of fraudulently billing private insurers more than $1.6 billion in a substance abuse treatment scam, the largest of its kind ever prosecuted by the Justice Department. That case includes charges against 39-year-old Nathan “Pablo” Young and 71-year-old David “Sancho Lopez” Young of Los Angeles and 42-year-old Honey Phipps and 36-year-old Cody Phipps of Greenville, Texas.

The four defendants are accused of orchestrating a years-long scheme to lure patients from across the country to Southern California for sham substance abuse treatment. 

Prosecutors allege that the Youngs targeted the homeless and poor by offering them free flights to California, money, apartments, gift cards, illegal drugs, and marijuana. They are accused of manipulating insurance coverage to maximize reimbursements while failing to deliver on promises to drug addicts. 

“Some so-called ‘premium’ patients with high-reimbursing insurance policies received luxurious accommodation, stays in hotels and private apartments, and dinners, among other inducements, whereas the ‘non-premium’ patients lived in cramped, unsanitary, crowded, and often derelict housing described as ‘trap houses,” the Justice Department said. The department also alleged that “to keep patients cycling through their facilities, the Youngs directed that patients be drugged with medication – ‘to knock the client out’ – if they tried to leave.”

The four defendants are charged with conspiracy to commit health care fraud and wire fraud, conspiracy to violate and violating the Eliminating Kickbacks in Recovery Act, and other related offenses. The Daily Wire reached out to lawyers for the Youngs for comment. No lawyers were immediately listed for the Phippses. 

Charges were also announced against 78-year-old Harold Tabaie, a cardiothoracic surgeon, and his business partner, Hany Malek, 61, a chiropractor. They allegedly billed Medicare $135 million for medically unnecessary arterial procedures. 

Investigators say that Malek pretended to be a medical doctor and recommended that patients receive atherectomies, a procedure that clears plaque from arteries. Tabaie would then perform the procedures on patients who did not need them. To conceal the unusually high number of procedures Tabaie performed, the pair allegedly billed Medicare under the names of other providers who did not perform the surgeries, according to the Justice Department. 

Neither Tabaie nor Malek had lawyers listed in court documents. 

Prosecutors also announced charges in three hospice schemes that allegedly billed Medicare more than $138 million for patients who were not terminally ill. A separate defendant was indicted in a nearly $270 million scheme to defraud Medi-Cal, California’s Medicaid program, through bogus pharmacy claims. 

“Our message is simple,” McDonald said Thursday. “If you steal from the American taxpayer, if you exploit vulnerable Americans, if you treat healthcare patients as dollar bills, the Department of Justice is coming for you.”

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