The Justice Department today announced charges against 15 defendants, including six medical professionals, for health care fraud schemes that collectively resulted in over $1.8 billion in fraudulent claims to government and private health care programs. This includes over $1.6 billion billed in a scheme to lure vulnerable individuals to California for sham substance abuse treatment, the largest case of its type ever prosecuted by the Department. $134 million fraudulently billed to Medicare for unnecessary atherectomy procedures that resulted in injury to patients; and over $138 million fraudulently billed to Medicare in three different hospice fraud schemes where the patients were not terminally ill.
Key details of the case
In addition, another defendant was indicted after previously being charged by complaint in a $270 million scheme to defraud Medi-Cal, California’s Medicaid program, by submitting pharmacy claims for bogus prescriptions. Eight defendants were arrested today, six of whom are expected to make their initial appearances this afternoon at the U.S. District Court in downtown Los Angeles, and two of whom are expected to make their initial appearances at a U.S.
District Court in Texas. “These charges include the largest sober home fraud scheme the Department has ever prosecuted. A scheme involving unnecessary invasive procedures detected through data analytics,” said Assistant Attorney General Colin M.
Meanwhile, mcDonald of the Justice Department’s National Fraud Enforcement Division. “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.”. “Today the FBI and our partners executed 8 arrests, with 7 additional defendants charged, after the subjects involved allegedly orchestrated a multi-year healthcare fraud scheme resulting in $1.8 billion in losses,” said FBI Director Kash Patel.
Enforcement actions and official statements
In addition, “The defendants – including 6 medical professionals – made fraudulent claims to steal from taxpayer funded healthcare and insurance programs, including substance abuse treatment programs, hospice care. Medicare programs in the Los Angeles area designed to help the most vulnerable. Under President Trump’s leadership with the White House Task Force to Eliminate Fraud, stealing from American taxpayers will no longer be tolerated in this country. For complete details, refer to the official DOJ press release.
As a result, this FBI will continue to move aggressively with our Department of Justice to dismantle fraud networks stealing from hard working taxpayers.”. “It is especially egregious when doctors and other health care professionals, who pledged to do no harm, resort to petty greed and criminality,” said First Assistant U.S. Attorney Bill Essayli for the Central District of California.
“The cases announced today represent billions of dollars in intended losses. Every dollar drained out of our private and public health insurance systems is one less dollar available to those who truly need it.”. “Healthcare fraud cheats American taxpayers and health care programs out of billions of dollars,” said Patrick Grandy, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. For related coverage, see Inside the $50,000 conspiracy scheme that led to Texas Man Sentenced’s conviction.
Notably, “The FBI will continue to work with our law enforcement partners to do everything in our power to safeguard our government health care programs and the taxpayers picking up the bill.”. “The magnitude of the fraud alleged in these cases reflects the extraordinary lengths bad actors will go to profit at the expense of patients,” said Acting Deputy Inspector General for Investigations Miranda L. Bennett of the U.S.
Department of Health and Human Services Office of Inspector General (HHS-OIG). “Today's takedown sends a clear message: no matter how complex the scheme, those who exploit patients and steal from federal health care programs will be identified and held accountable. HHS-OIG remains committed to working with our law enforcement partners to protect beneficiaries, safeguard taxpayer dollars. For related coverage, see South Korea Set to Ban Disturbing Deepfake Porn Consumption.
Subsequently, preserve the integrity of federal health care programs.”. “Healthcare fraud is not a victimless crime,” said Darren Lian, Special Agent in Charge of IRS Criminal Investigation’s Los Angeles Field Office. “It harms patients, drives up healthcare costs, and diverts critical resources away from those who genuinely need care.
At the same time, these investigations demonstrate the unique role IRS Criminal Investigation plays in uncovering complex fraud schemes by following the money. Working alongside our law enforcement and prosecutorial partners, we remain committed to identifying those who exploit healthcare programs for personal gain, protecting the integrity of our healthcare system. Holding offenders accountable.”.
Nathan Young, David Young, Honey Phipps, and Cody Phipps. Nathan Young, also known as “Pablo,” 39. David Young, also known as “Sancho Lopez,” 71, both of Los Angeles, and Honey Phipps, 42, and Cody Phipps, 36, both of Greenville, Texas, were charged with a years-long scheme to traffic vulnerable patients from around the country to Southern California and elsewhere to receive sham substance abuse treatment that was billed to private insurance companies to the tune of over $1.6 billion.
“By diverting critical funding from a vulnerable community, the accused stripped away a vital lifeline for those seeking addiction recovery support,” said David Olesky, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Los Angeles Field Division. “DEA is honored to be a part of this multi-agency effort investigating and holding accountable those that exploited their positions of trust within the medical community. I am proud of the long hours and tireless commitment our DEA Diversion team and our partners poured into this investigation.”.
Investigation and prosecution details
As alleged in the indictment, father and son David and Nathan Young controlled dozens of purported substance abuse treatment companies in the Los Angeles area and around the country. The Youngs directed “body brokers,” including Honey and Cody Phipps, to target vulnerable populations, such as individuals who were unhoused and in poverty and individuals attending substance abuse support groups. The defendants allegedly sought out individuals whose insurance policies provided the most generous reimbursements. Often fraudulently enrolled individuals in new insurance policies for which they were not eligible, to ensure that they obtained the highest reimbursement for their sham treatment.
