Federal authorities announced criminal charges against 15 defendants, dismantling a sprawling web of health care fraud in Southern California and elsewhere that drained roughly $2 billion in fraudulent claims from private insurance and government programs.
The Justice Department revealed that the sweeping enforcement action targets sham substance abuse treatment centers, unnecessary invasive arterial procedures, and fraudulent hospice operations. According to the Department of Justice, the takedown includes the largest case of its type ever prosecuted by the Department, netting more than $1.6 billion in fraudulent billings.
Targeting the Nation’s Largest Sober Home Fraud Scheme
At the center of the sprawling investigation is a multi-year operation allegedly run by father and son David Young, 71, and Nathan Young, 39, alongside associates Honey Phipps, 42, and Cody Phipps, 36. Federal prosecutors state that the group operated dozens of purported substance abuse treatment companies across the Los Angeles area and nationwide.
Individuals were drawn to Southern California and other locations through offers of complimentary flights, cash, apartments, hotel accommodations, vehicles, gift cards, marijuana, tobacco, controlled substances such as illicit drugs, and additional prescription medications handed out freely by physicians working for the Youngs.
Operating out of North Myrtle Beach, North Carolina, 33-year-old Nicholas Moore oversaw multiple facilities belonging to the Youngs and entered a guilty plea to a superseding information that accused him of conspiring to commit wire fraud and health care fraud. Moore admitted to assisting in submitting $199 million in fraudulent claims.
Surgeon and Chiropractor Face Indictment over Unnecessary Medical Procedures
Beyond the sober home enterprise, the federal takedown exposes dangerous medical procedures performed solely to pad profit margins. Harold Tabaie, 78, a cardiothoracic surgeon from Anaheim, and chiropractor Hany Malek, 61, of Tarzana, face indictment over a $135 million scheme involving medically unnecessary atherectomies. Prosecutors state that Malek posed as a medical doctor to diagnose patients with arterial disease, directing them to undergo invasive procedures involving bladed catheters at two co-owned clinics, West Regional Cardio Thoracic and Vascular Surgeons and Angelus Medical Clinic Multi Specialty Group.
Federal regulators also uncovered three distinct hospice fraud schemes totaling more than $138 million in fraudulent Medicare billings where patients were not terminally ill. A separate defendant also faced indictment in connection with a $270 million scheme targeting California’s Medi-Cal program through bogus pharmacy prescriptions.
Coordinated Multi-Agency Arrests Across State Lines
Law enforcement executed eight arrests, with seven additional defendants charged via indictment or complaint. Six of the arrested individuals were expected to make their initial appearances in U.S. District Court in downtown Los Angeles, while two were expected to make their initial appearances at a U.S. District Court in Texas.
The coordinated sweep involved the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Department of Health and Human Services Office of Inspector General.
“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 wherever you are,” said Assistant Attorney General Colin M. McDonald of the Justice Department’s National Fraud Enforcement Division.
