The Justice Department announced charges on Thursday against 15 people, including six medical professionals, in a Southern California health care fraud takedown. Prosecutors say the schemes involved more than $1.8 billion in fraudulent claims and nearly $2 billion in alleged losses. Eight defendants were arrested. The cases stretch from a sober-home network that allegedly recruited vulnerable people into treatment they did not need to a surgeon accused of performing unnecessary artery procedures, and from hospice companies to a pharmacy that billed Medi-Cal for drugs patients did not need.
The dollar figure is the headline. The mechanism is more useful. In case after case, the alleged fraud was a business model built on billing codes that were paid without anyone checking whether the service described in the code had happened, rather than a matter of a few inflated bills.
That is the vulnerability the cases expose, and it is also the reason they were caught. The government's own payment data eventually showed numbers that did not fit: a physician whose atherectomy billing was an extreme national outlier, hospices whose patients were discharged alive at rates far above the national average, a pharmacy whose monthly claims jumped into the tens of millions. The Justice Department's announcement and the Los Angeles U.S. Attorney's Office describe the schemes in detail. The charges are allegations. Every defendant is presumed innocent.
The largest case was a treatment pipeline
The biggest alleged scheme, more than $1.6 billion, centered on four defendants: Nathan Young, David Young, Honey Phipps and Cody Phipps. Prosecutors say they controlled dozens of treatment companies and directed recruiters to bring unhoused and impoverished people, and people attending support groups, to Southern California for substance-abuse treatment that was billed to private insurers.
The recruiters allegedly looked for generous insurance policies and sometimes enrolled people fraudulently. They offered flights, cash, apartments, hotels, cars, gift cards, cigarettes and prescriptions. The people they recruited were then cycled through facilities regardless of medical need. Staff allegedly coached fabricated symptoms and encouraged drug or alcohol use to qualify patients for detox. The therapy that followed was, in the government's account, sometimes a large video call that patients could ignore with their cameras on.
Prosecutors also allege that patients were kept from leaving, isolated from family and moved between facilities. Some were placed in crowded housing. The government says the scheme was designed to keep the billing stream open, not to treat the people in it. Nicholas Moore, described as an area manager and nominal owner of several of the facilities, pleaded guilty to conspiracy and admitted helping submit about $199 million in fraudulent claims.
The case is the largest sober-home fraud scheme the department has prosecuted, according to Assistant Attorney General Colin M. McDonald. The government's theory is that the treatment was a pretext for billing and the patients were the inventory, rather than that the care was merely poor.
The atherectomy numbers did not fit
The second-largest alleged scheme involved a cardiothoracic surgeon, Harold Tabaie, and a chiropractor, Hany Malek. Prosecutors say Malek posed as a physician at clinics in Anaheim and Tarzana, diagnosed arterial disease and recommended atherectomies, a procedure that uses a bladed catheter to clear plaque from arteries. Tabaie allegedly performed the procedures on patients who did not have arterial disease, including repeat procedures on patients whose earlier treatment had failed. Some patients suffered severe pain and discomfort.
The government says the defendants concealed the volume by billing under other providers' names and paid kickbacks that included transportation, groceries, household goods, gift cards and utility payments. They also allegedly steered patients into particular Medicare plans.
The case was found through data. Federal analysts identified Tabaie as an extreme national outlier for atherectomy billing from 2016 through 2023. That is the kind of pattern a payment system can see even when a patient cannot. The procedure has a code, the code has a price, and the volume stands out against every other physician in the country. The government alleges about $135 million in fraudulent claims. Malek also faces bank fraud charges over allegedly false Paycheck Protection Program loan applications.
Hospice patients who were never told
Three hospice cases account for more than $138 million in announced claims, and their common metric is a number that hospice regulators watch closely: the non-death discharge rate.
At Transitions Hospice, prosecutors say Geoffrey Jimenez and marketers recruited seniors with free services and kickbacks, avoided the word hospice in favor of palliative services, photographed identification and completed paperwork outside patients' presence. The hospice allegedly billed about $9.8 million and was paid about $8.3 million. Its non-death discharge rate was about 85 percent, more than four times the national average. Jimenez allegedly controlled more than a dozen other hospices that billed over $107 million, with non-death discharge rates above 75 percent and sometimes 90 percent.
Richard Keech, a physician, was charged over his role as medical director for Blue Cross Hospice and Atlantica Management. Prosecutors say he signed referrals and false Certificates of Terminal Illness supporting more than $10 million in claims, including for beneficiaries who had not elected hospice and did not know they were enrolled. Armani Raffi was charged over four Sherman Oaks hospices that allegedly used nominee owners, falsified physician certifications and kickback-driven recruiting to generate about $21 million in claims and $17.5 million in payments. The government says patients, marketers and physicians were shared across the entities and that records were fabricated.
A patient who is enrolled in hospice without knowing it can lose access to curative treatment. That is the harm beyond the money. The government says the schemes disrupted legitimate care, and the hospice discharge numbers are the trail they left.
The pharmacy window
The Medi-Cal pharmacy case is the clearest example of a payment control being switched off at the wrong moment. Prosecutors say Christina Mareik and others exploited Medi-Cal's suspension of prior authorization during a payment-system transition. Through Monte Vista Pharmacy, they allegedly billed tens of millions of dollars a month for medically unnecessary generic drugs, supported by thousands of bogus prescriptions.
The claims totaled about $269 million, and Medi-Cal paid at least $178.7 million, according to the government. Mareik allegedly received about $279,000. The case was filed in June and was announced with the takedown.
Prior authorization is unpopular with clinicians because it delays care. The Mareik case shows the other side of the tradeoff. When the check is removed, even temporarily, the billing system has no way to distinguish a legitimate prescription from a fabricated one until the data is reviewed later. The alleged scheme did not need to defeat the control; it needed the control to be absent.
Kickbacks are the connective tissue
The remaining cases are smaller in dollars but similar in structure. Two physicians, Hassan Badday and Robby Ayoub, were charged over allegedly accepting per-patient payments from a marketer for a Houston laboratory in exchange for access to Medicare patients and signatures on genetic-testing orders. The tests were allegedly medically unnecessary and rarely used in treatment. Badday's orders generated more than $4.2 million in claims, and Ayoub's generated more than $1.3 million.
Thomas Mladinich was charged over rehab referrals. His plea agreement admits receiving between $150,000 and $250,000 in kickbacks, including a $33,000 check, for referring drug-addicted patients to a rehabilitation facility. The facility allegedly required 21-day stays before recruiters were paid, and many patients left on day 21 against medical advice. A marketing services contract allegedly concealed the per-patient payments.
The pattern repeats because the referral is the product. A patient who can be directed to a particular laboratory, hospice, pharmacy or rehab facility has value to the provider that receives the billing, and the marketer who can deliver that patient can charge for the introduction. The payment is often dressed as a marketing fee, a consulting contract or a transportation reimbursement. The government's cases allege that the label changed and the per-patient math did not.
Dejun Wang, a physician, was charged with selling prescription drug samples, including Rybelsus, Ozempic and Mounjaro, to pharmacy owners who repackaged and dispensed them. The amounts are smaller, but the mechanism is the same: a licensed professional using the credential that makes the billing possible.
The data is the control
The Health Care Fraud Strike Force has charged more than 6,200 defendants since 2007, and its cases have involved more than $45 billion in fraudulent billings, according to the Justice Department. The takedown announced this week is one of its largest, but the method is familiar. Agents follow the billing data, compare a provider to peers, and look for the outlier. The government's case in the atherectomy matter rests on a billing pattern that stood out for seven years. The hospice cases rest on discharge rates. The pharmacy case rests on a volume spike during a known control gap.
That method has limits. It catches schemes that produce unusual numbers, and it depends on the payment system collecting the right data in the first place. A scheme that stays inside the normal range is harder to see. A scheme that operates in a gap, like the pharmacy case, can run until someone reviews the claims.
The other limit is human. The people recruited into the sober-home network were chosen because they were unlikely to complain, and the hospice patients were allegedly enrolled without understanding what had happened. Enforcement after the fact can recover money and send people to prison. It cannot undo the treatment that was never given or the care that was disrupted.
McDonald said the department's message is that the data will lead us to wherever you are. That is true as far as it goes. The data led investigators to these cases. The question the cases leave open is how many schemes are still inside the range where the numbers look ordinary.
Primary sources
- U.S. Department of Justice, Office of Public Affairs announcement of the Los Angeles health care fraud takedown, October 22, 2026.
- U.S. Attorney's Office for the Central District of California, case announcement and defendant list.
- CBS News Los Angeles, coverage of the arrests and the alleged loss figures.