Federal Agents Bust Southern California Health Care Fraud Network Accused of Nearly $2 Billion in False Claims
On Thursday, federal prosecutors and agents working under the Trump administration hit California’s out-of-control health care fraud industry with another major blow. They charged 15 people, six of them medical professionals, in schemes that together sent more than $1.8 billion in fraudulent claims to Medicare, private insurers and other programs.
First Assistant U.S. Attorney Bill Essayli and Assistant Attorney General Colin M. McDonald led the Justice Department’s announcement. Prosecutors called one of the cases the largest substance abuse treatment fraud scheme the department has ever prosecuted. The charges also cover unnecessary, invasive artery procedures that injured patients and several hospice operations that billed for patients who were not terminally ill, the New York Post reported.
Eight of the defendants were arrested. The others have been charged and are expected to appear in court.
FBI Los Angeles said agents and partner agencies made the arrests early in the morning in Southern California, Dallas and Chicago. Two other defendants had already been arrested the week before. FBI Director Kash Patel said the defendants, medical professionals among them, “made fraudulent claims to steal from taxpayer funded healthcare and insurance programs.” Patrick Grandy, who heads the FBI’s Los Angeles Field Office, said health care fraud “cheats American taxpayers and health care programs out of billions of dollars.”
According to the DOJ, the cases include a father-and-son operation and a pair of Texas recruiters. They are accused of trafficking vulnerable people, including homeless people and people in recovery programs, to Southern California for fake treatment.
Nathan Young, 39, and his father, David Young, 71, both of Los Angeles, are charged along with Honey Phipps, 42, and Cody Phipps, 36, of Greenville, Texas. Prosecutors say their scheme ran for years and billed private insurers more than $1.6 billion.
Prosecutors say the group controlled dozens of supposed treatment facilities. They allegedly relied on “body brokers” who drew in addicts and homeless people with free flights, apartments, cash, drugs and other incentives.
Prosecutors allege patients were cycled from one facility to another to generate bills, whether or not they needed care. Some were reportedly pressured or kept isolated.
A fifth defendant, Nicholas Moore, has already pleaded guilty and admitted his part in about $199 million in claims. McDonald put it plainly: “This was not treatment, it was not recovery. It was exploitation.”
In a separate case, cardiothoracic surgeon Harold Tabaie, 78, of Anaheim, and chiropractor Hany Malek, 61, of Tarzana, were charged over roughly $134 million in Medicare billings. The billings were for atherectomies, invasive procedures that remove plaque from arteries, allegedly performed on patients who didn’t need them.
Some patients were hurt and reported severe pain and repeated procedures. Malek is accused of pretending to be a physician to steer patients.
Other hospice schemes, totaling more than $138 million, allegedly enrolled Medicare patients who were not terminally ill. They then billed for services that were unnecessary or never provided.
Geoffrey Jimenez, 60, of Los Angeles, was charged in an operation involving Transitions Hospice and more than a dozen other entities.
One facility had an 85% rate of patients discharged alive, more than four times the national average. Physician Richard Keech, 83, of Torrance, was also charged and is accused of certifying patients as terminal when they weren’t.
Essayli has repeatedly pointed to California’s fraud problem. He said it is “especially egregious when doctors and other health care professionals, who pledged to do no harm, resort to petty greed and criminality.” He has said before that “California does fraud best.”
Patel linked the arrests to the White House Task Force to Eliminate Fraud. He said that under President Trump’s leadership, “stealing from American taxpayers will no longer be tolerated.”
