Federal authorities charged 15 people in a Southern California health care fraud sweep over $1.8 billion in claims, schemes prosecutors say harmed patients and drained taxpayer dollars.
Predawn raids hit Southern California on Thursday as the Justice Department moved against an alleged web of sham rehab programs, unnecessary surgeries, and phony hospice billing. Fifteen people, including six medical professionals, now face charges tied to roughly $1.8 billion in fraudulent claims submitted to government and private health insurance programs, Fox News reported.
Prosecutors describe patients recruited, recycled, and billed while real care never arrived. They also describe invasive procedures performed on people who did not need them, and hospice certifications for patients who were not dying. The dollars at stake came from Medicare, Medi-Cal, private insurers, and pandemic loan programs meant for legitimate businesses.
Assistant Attorney General Colin McDonald, of the Justice Department’s National Fraud Enforcement Division, framed the case as both a record-setting fraud takedown and a warning to anyone who treats health care billing as a free ATM.
"These charges include the largest sober home fraud scheme the Department has ever prosecuted and a scheme involving unnecessary invasive procedures that was detected through data analytics,"
McDonald said. He added a direct message for would-be thieves of public health money.
"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 you."
First Assistant United States Attorney Bill Essayli put the moral failure in plain terms, especially for licensed clinicians who took an oath first and chased billings later.
"It is especially egregious when doctors and other health care professionals, who pledged to do no harm, resort to petty greed and criminality,"
Essayli said. He also tied the theft to patients who never see the money.
"Every dollar drained out of our private and public health insurance systems is one less dollar available to those who truly need it."
One alleged scheme centers on atherectomies, procedures that clear plaque from arteries. Prosecutors say Dr. Harold Tabaie, a 78-year-old cardiothoracic surgeon from Anaheim, and Hany Malek, a 61-year-old Tarzana chiropractor, ran a $135 million Medicare billing operation built on medically unnecessary operations.
Authorities allege Malek posed as a medical doctor, diagnosed patients with arterial disease they did not have, and steered them toward atherectomies. Patients allegedly first appeared at a clinic tied to Tabaie and Malek, then got referred for surgery. Prosecutors say Tabaie performed the procedures, sometimes repeatedly on patients whose earlier operations had already failed. Several patients, authorities say, suffered extreme pain and discomfort.
Malek faces a separate set of allegations from the pandemic era. Prosecutors say he submitted fraudulent Paycheck Protection Program loan applications in 2021, fabricated a 25% revenue loss, and spent the money on personal expenses, family credit cards, other ventures, and rare coins. PPP loans were designed to keep payrolls alive during COVID lockdowns, not to bankroll coin collections.
The largest dollar figure in the sweep attaches to an alleged substance abuse scam run by Nathan Young, 39, and his father, David Young, 71. Prosecutors put the alleged fraud at $1.6 billion. They say the pair operated rehab centers across Los Angeles that billed insurance continuously while providing little or no real treatment.
Federal prosecutors say vulnerable patients were recruited by “body brokers” Honey Phipps, 42, and Cody Phipps, 36, of Greenville, Texas, and funneled into Los Angeles facilities. The allegations go beyond empty beds and false claims. Prosecutors say staff were ordered to drug patients with sedatives if they tried to leave, cut off family contact, block belongings, and keep people confined. In one described episode, when staff said a patient wanted to leave detox to smoke marijuana, the instruction was to give the patient what he wanted off-site, so he would stay and keep generating bills.
That is not recovery. It is alleged human inventory management for insurance payouts. McDonald called it the largest sober home fraud scheme the Justice Department has ever prosecuted.
Other defendants face charges in a separate alleged scheme that stole more than $140 million by falsely certifying patients who were not terminally ill for hospice care. Hospice is meant for the dying. Billing it for people who are not dying turns a final-care benefit into a cash machine and crowds out patients who actually need end-of-life support.
Christina Mareik, 61, of Whittier, is charged with submitting thousands of bogus prescriptions for high-reimbursement generic drugs to Medi-Cal, California’s Medicaid program. Dr. Hassan Badday, 48, of Los Angeles, and Dr. Robby Ayoub, 52, of Huntington Beach, are charged with taking illegal kickbacks from a Houston laboratory marketer in exchange for ordering unnecessary Medicare genetic tests.
Across the cases, the pattern is the same: diagnose what is not there, certify what is not true, prescribe what is not needed, and bill the public or private insurer as if medicine happened. The FBI participated in the early Thursday arrest activity during the raids, according to Justice Department photo material cited in the coverage.
Medicare, Medi-Cal, private insurers, and emergency small-business relief all exist because the public accepts a basic bargain: money follows real care, real need, and real employment. The charges announced in this sweep allege the opposite bargain, billings without treatment, surgeries without medical necessity, hospice without terminal illness, and loans without honest books.
Data analytics helped flag the unnecessary invasive procedures, McDonald said. That matters. Paper trails and billing patterns can expose schemes that soft-touch oversight misses for years. When enforcement finally arrives with predawn raids, it is after alleged losses have already stacked into the hundreds of millions and, in the Youngs’ case, into the billions in claimed fraud.
The Justice Department has charged 15 people. Six of them are medical professionals. The allegations still have to be proven in court. What is already clear from the charging narrative is the scale of the alleged harvest from programs built for the sick, the addicted, and the dying.
Health care fraud is not a victimless billing dispute. It is alleged theft from taxpayers, insurers, and patients who get cut off from family, dosed to stay put, or put under the knife for procedures they did not need. When clinicians trade the oath for the invoice, somebody honest pays the tab.
