Feds Bust $2 Billion Health Fraud Where Addicts Who Tried to Leave Were Allegedly Drugged

Federal agents fanned out across Southern California, Dallas and Chicago before dawn Thursday and arrested eight people in what the Justice Department calls a nearly $2 billion health care fraud takedown. In all, 15 defendants were charged, six of them medical professionals, and the centerpiece is a $1.6 billion sober-home racket that the department says is the largest substance abuse treatment fraud it has ever prosecuted, according to the U.S. Attorney's Office in Los Angeles.

The money came from Medicare, Medi-Cal and private insurers, which means it came from taxpayers and from everyone who pays a premium. "Steal from the American people, and we're coming for you," FBI Director Kash Patel wrote.

The $1.6 billion 'trap house' scheme

Prosecutors say a father and son, Nathan Young, 39, known as "Pablo," and David Young, 71, known as "Sancho Lopez," controlled dozens of fake treatment companies in Los Angeles and around the country. Paid "body brokers," including Honey and Cody Phipps of Greenville, Texas, allegedly recruited homeless people and people at addiction support groups, hunting for the insurance plans that paid the most, and sometimes signing them up for policies they weren't eligible for, the indictment alleges.

Recruits were lured west with free flights, cash, cars, gift cards, marijuana and even illegal drugs. Patients with "premium" insurance got hotels and dinners. Everyone else went to cramped, filthy housing that prosecutors say was called "trap houses."

Then came the part that turns fraud into cruelty. Prosecutors say the Youngs ordered staff to drug patients "to knock the client out" if they tried to leave, cut them off from family, and physically blocked the door, all to keep billing. Staff allegedly coached patients to fake symptoms, and some were encouraged to use drugs or alcohol so they would qualify for detox. The "therapy" was a Zoom call with more than 100 people, where patients were told they could "lay out on [the] beach" as long as their cameras were on, the department said.

A North Carolina man who managed some of the Youngs' facilities, Nicholas Moore, has already pleaded guilty and admitted helping submit $199 million in fake claims.

Surgery on healthy arteries

In a separate case, Anaheim cardiothoracic surgeon Dr. Harold Tabaie, 78, and his business partner, Tarzana chiropractor Hany Malek, 61, are charged with billing Medicare $135 million for atherectomies, a procedure that scrapes plaque out of arteries with a bladed catheter. Prosecutors say Malek posed as a medical doctor and diagnosed artery disease in patients who didn't have it, and Tabaie operated anyway, sometimes again and again, leaving some patients in extreme pain, Fox News reported. Data analytics flagged Tabaie as one of the most extreme outliers in the country for the procedure.

Malek is also accused of lying on a 2021 COVID-era PPP loan application and spending the money on personal bills, family credit cards and coins.

Hospice for people who weren't dying

Three more cases target hospices that enrolled seniors who were not terminally ill, more than $138 million in claims combined. At one, Transitions Hospice, about 85% of patients left alive, more than four times the national average; prosecutors say its owner, Geoffrey Jimenez, controlled more than a dozen other hospices that billed $107 million more. An 83-year-old Torrance doctor is charged with signing false terminal-illness forms for patients who didn't even know they were in hospice, per the release.

And one more stands out for California taxpayers: a Whittier woman is now indicted in a $270 million scheme that prosecutors say exploited Medi-Cal's own decision to suspend prior-authorization checks during a switch to a new payment system. Medi-Cal paid out about $179 million before anyone stopped it.

Why this keeps happening

Southern California has long been a hot spot for this kind of fraud, and the people paying for it never get a vote. What's different now is the pressure. The DOJ created a National Fraud Enforcement Division in April, and the work feeds Vice President JD Vance's Task Force to Eliminate Fraud, which has already suspended 447 Los Angeles hospices over more than $600 million in suspected fraud, as Fox News has reported. "The data will lead us to you," Assistant Attorney General Colin McDonald said.

Every defendant is presumed innocent until proven guilty. But if even half of this is true, a lot of people got rich by keeping addicts high, cutting open healthy seniors and billing the rest of us for it.