The US Department of Justice announced on Thursday (October 22) that 15 individuals in the Los Angeles area have been indicted for their involvement in multiple healthcare fraud cases, with total estimated losses nearing $2 billion. Among the 15 defendants, 10 have already been arrested, with 8 individuals apprehended in joint law enforcement operations in Los Angeles, Dallas, and Chicago.
The message from authorities was clear: if you steal from American taxpayers, exploit vulnerable American citizens, treat patients as cash cows, the Department of Justice will track you down. The fraudulent schemes involved in the cases include false addiction treatment prescriptions, unnecessary arterial surgeries, hospice care fraud, kickbacks from genetic testing, and pharmaceutical fraud.
According to the Department of Justice, one of the cases involves over $1.6 billion in addiction treatment fraud claims, making it the largest similar case prosecuted by the department to date.
Another case involves billing Medicare $134 million for unnecessary arterial surgeries, with some patients being harmed by the surgeries; there are also three cases of hospice care fraud, alleging over $138 million in charges billed for patients who didn’t actually have terminal illnesses.
Additionally, one defendant was previously indicted for involvement in a $270 million California Medi-Cal pharmaceutical fraud case. Authorities allege that the individual submitted false prescription drug charges through pharmacies.
FBI Director Kash Patel stated that these cases involve years of ongoing healthcare fraud, resulting in approximately $1.8 billion in losses. The agency will continue to collaborate with the Department of Justice and other law enforcement agencies to combat fraudulent networks that embezzle taxpayer funds.
According to the indictment, 39-year-old Nathan Young, also known as “Pablo,” along with his 71-year-old father David Young, and Hani Phipps and Cody Phipps from Texas, are suspected of recruiting vulnerable individuals from across the US to undergo false addiction treatment in Southern California and then billing private insurance companies over $1.6 billion.
Prosecutors allege that the Young father and son controlled dozens of purported addiction treatment facilities in Los Angeles and nationwide, instructing recruiters to target homeless individuals, the impoverished, and members of addiction support groups.
The defendants would prioritize finding patients with higher insurance payouts, even enrolling individuals who did not qualify for coverage illegally to receive more insurance reimbursements. They enticed patients to come to treatment facilities with offers such as free airline tickets, cash, apartments, hotel accommodations, cars, gift cards, marijuana, cigarettes, controlled substances, and other prescription drugs.
However, upon arrival, promised treatments and care often went unfulfilled. Prosecutors stated that patients with higher insurance payouts received better accommodations, private apartments, and dining, while others were placed in overcrowded, unsanitary, and dilapidated housing.
The indictment also alleges that the Young father and son continuously cycled patients in and out of their facilities, regardless of whether the patients truly needed treatment, in order to keep billing insurance companies. If patients attempted to leave, the defendants would make them ingest sedatives, provide drugs, cut off contact with family members, prevent them from retrieving personal belongings, and use force to keep them from leaving.
Additionally, the defendants are accused of encouraging patients to fabricate symptoms to qualify for addiction treatment; some patients were even encouraged to use drugs or alcohol to meet treatment qualifications.
After completing the addiction treatment program, some patients only participated in large online Zoom courses with over 100 participants. Patients could simply turn on their cameras without actively participating in treatment, yet these services were still billed as insurance-covered items.
Another case involves 78-year-old cardiac surgeon Harold Tabaie and 61-year-old spinal massage therapist Hany Malek. The two are accused of billing Medicare $135 million for unnecessary arterial surgeries.
The indictment alleges that the defendants performed unnecessary arterial plaque removal surgery at their jointly owned and operated clinics in Los Angeles—West Regional Cardio Thoracic and Vascular Surgeons and Angelus Medical Clinic Multi Specialty Group.
Prosecutors claim that Malek impersonated a physician, diagnosed patients with arterial diseases, and recommended arterial plaque removal surgery, which was then performed by Tabaie. However, some patients did not have arterial diseases but still underwent surgery, and some patients were repeatedly scheduled for the same surgery, leading to severe pain and discomfort.
To conceal the unusually high volume of surgeries, the defendants are also accused of falsely billing for procedures allegedly performed at other medical facilities. Prosecutors stated that the clinics also attracted Medicare beneficiaries for treatment with offers such as free transportation, food, household items, gift cards, and utility bill payments.
Investigators discovered through medical billing data that Tabaie’s arterial surgery billing stood out abnormally among healthcare providers nationwide, prompting further investigation.
Malek is also charged with Paycheck Protection Program (PPP) loan fraud. The indictment alleges that in 2021, he submitted false loan applications, claiming that the company’s total income decreased by over 25% from 2019 to 2020 and used the loans for personal expenses, other business ventures, family credit card bills, and buying coins.
The cases announced by the Department of Justice also include multiple instances of hospice care fraud. Prosecutors allege that some operators registered individuals who didn’t have terminal illnesses as hospice care patients, allowing them to bill Medicare for services.
60-year-old Los Angeles resident Geoffrey Jimenez is charged with similar fraudulent billing through Transitions Hospice Inc., totaling approximately $9.8 million, with actual reimbursements exceeding $8.3 million.
Prosecutors noted that the facility’s non-death discharge rate was around 85%, more than four times the national average, indicating that many patients might not qualify as terminal illness cases. Jimenez and his marketers recruited seniors in community centers by offering free medical services and other benefits, some of which involved illegal kickbacks.
Prosecutors also claim that Jimenez controlled over a dozen other hospice care facilities that collectively submitted over $107 million in similar suspicious claims, with many facilities having non-death discharge rates exceeding 75%, and in some instances, even surpassing 90%.
Another defendant, 83-year-old physician Richard Keech, is accused of signing documents for at least two hospice care companies, referring Medicare beneficiaries to related facilities and signing false Certifications of Terminal Illness (CTIs), falsely stating that patients were expected to live no more than six months. Some patients were unaware that they were registered for hospice care.
59-year-old Armani Raffi is alleged to have arranged ineligible patients to receive services through four related hospice care facilities and billed for non-existent or unnecessary medical care. Prosecutors claim that the facilities collectively submitted around $21 million in fraudulent claims and received over $17.5 million in reimbursements.
Furthermore, California physicians Hassan Badday and Robby Ayoub are separately accused of accepting kickbacks and approving unnecessary genetic testing.
According to the indictment, a Houston laboratory, ApolloMDx, provided cash and wire transfers to the defendants in exchange for allowing their marketers to contact Medicare patients, collect DNA samples, and sign genetic testing applications. Prosecutors state that the tests lack medical necessity, and the results are rarely used for actual patient disease management or treatment.
Additionally, 38-year-old Newport Beach resident Thomas Steven Mladinich is accused of accepting illegal kickbacks to refer drug addiction patients to a rehab facility. He received a check for $33,000 and received between $150,000 to $250,000 in kickbacks through patient referrals.
Another case involves 61-year-old resident Christina Mareik from Whittier. She is accused of participating in a nearly $270 million Medi-Cal prescription drug billing fraud scheme. Prosecutors allege that Mareik exploited Medi-Cal’s halt on requiring medical service providers to get prior authorization for reimbursement by billing for unnecessary and higher-reimbursed non-contract generic drugs through Monte Vista Pharmacy.
Investigators stated that the scheme submitted approximately $269.13 million in false claims, with Medi-Cal paying at least $178.746 million, resulting in Mareik obtaining at least $279,000 in illegal proceeds.
Additionally, 62-year-old physician Dejun Wang from Walnut is accused of selling prescription drug samples not authorized for sale, including Rybelsus, Ozempic, and Mounjaro. Prosecutors claim that the drugs were sold to pharmacy operators in the San Gabriel Valley, repackaged, and provided to customers.
The Department of Justice stated that the cases were investigated jointly by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, the Department of Health and Human Services Office of Inspector General, the Drug Enforcement Administration, and other law enforcement agencies.
The Department of Justice emphasized that healthcare fraud not only embezzles taxpayer funds but also harms patients, inflates medical costs, and deprives those truly in need of medical services of essential resources. All details listed in the indictments and criminal charge documents are allegations, and defendants are presumed innocent until proven guilty in court.