Federal prosecutors in Los Angeles have charged 15 defendants, six of them medical professionals, in a series of health care fraud cases that together involve about $2 billion in allegedly fraudulent claims to public and private health plans. The centerpiece is a sober-home scheme that the Justice Department describes as the largest substance abuse treatment fraud case it has ever prosecuted, with more than $1.6 billion billed to private insurers. The charges were announced on October 22, 2026, by the U.S. Attorney’s Office for the Central District of California.
Eight defendants were arrested on the day of the announcement, most of them making initial appearances in federal court in downtown Los Angeles and three in federal courts in Texas and Illinois. The investigations were carried out by the FBI, IRS Criminal Investigation, the Drug Enforcement Administration, the HHS Office of Inspector General, the U.S. Marshals Service and, in one case, the California Department of Justice. Prosecutors from the U.S. Attorney’s Office worked alongside trial attorneys from the Justice Department’s National Fraud Enforcement Division, which the department created in April 2026.
The largest case, United States v. Young, charges Nathan Young and his father, David Young, both of Los Angeles, along with Honey Phipps and Cody Phipps of Greenville, Texas. According to the indictment, the Youngs controlled dozens of purported treatment companies in the Los Angeles area and elsewhere and used “body brokers,” including the Phippses, to recruit homeless people and attendees of recovery support groups from around the country. Prosecutors allege the group targeted people whose insurance policies paid the most generous reimbursements, and in many cases fraudulently enrolled them in new policies for which they were not eligible. Recruits were allegedly lured with free flights, cash, housing, cars, gift cards and drugs.
The indictment describes a two-tier system in which “premium” patients with high-paying coverage received hotel stays and private apartments, while others were placed in crowded, unsanitary housing. Prosecutors allege patients were cycled through the facilities to keep billing regardless of medical need, were sometimes sedated or physically prevented from leaving, were coached to fake symptoms to qualify for detox, and in some instances were encouraged to use drugs or alcohol to become eligible for treatment. The billed “therapy” allegedly consisted largely of Zoom sessions with more than 100 attendees, where patients needed only to turn on their cameras. The four defendants face conspiracy, health care fraud and wire fraud charges, along with counts under the Eliminating Kickbacks in Recovery Act (18 U.S.C. § 220), a 2018 law that criminalizes kickbacks for referrals to recovery homes, treatment facilities and laboratories and, unlike the Medicare-focused anti-kickback law, reaches private insurance. A related defendant, Nicholas Moore of North Myrtle Beach, North Carolina, who served as an area manager and nominal owner of several of the Youngs’ facilities, has pleaded guilty to conspiracy and admitted helping submit $199 million in fraudulent claims to insurers.
A second case targets alleged patient harm. Dr. Harold Tabaie, an Anaheim cardiothoracic surgeon, and his business partner Hany Malek, a Tarzana chiropractor, are charged with billing Medicare roughly $135 million for medically unnecessary atherectomies, an invasive procedure that uses a bladed catheter to clear plaque from arteries. The indictment alleges that Malek posed as a medical doctor to diagnose arterial disease, that Tabaie performed procedures on patients without such disease, and that the clinics billed under other providers’ names to hide Tabaie’s unusually high volume. Prosecutors also allege kickbacks to patients in the form of free rides, groceries, gift cards and utility payments. According to the release, the case was flagged by data analytics showing Tabaie was an extreme national outlier for atherectomy billing. Malek separately faces bank fraud charges tied to an allegedly fraudulent Paycheck Protection Program loan.
Three hospice cases account for more than $138 million in alleged Medicare billings. Geoffrey Jimenez of Los Angeles is charged by complaint with enrolling non-terminal seniors, recruited at community centers, in his Transitions Hospice; prosecutors say the company’s non-death discharge rate of about 85 percent was more than four times the national average, and that Jimenez controlled more than a dozen other hospices that billed over $107 million. Dr. Richard Keech, an 83-year-old Torrance physician and hospice medical director, is charged with signing false certifications of terminal illness that caused more than $10 million in claims. Armani Raffi of Van Nuys is charged with running four interconnected Sherman Oaks hospices that allegedly billed about $21 million, with marketers paid $1,500 to $1,800 per referral.
The remaining cases involve kickbacks and drug fraud. Two physicians, Hassan Badday of Los Angeles and Robby Ayoub of Huntington Beach, are charged in separate indictments with taking per-patient kickbacks to sign genetic testing orders billed to Medicare by a Houston laboratory, in violation of the federal Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)). Thomas Mladinich of Newport Beach, who according to the release has entered a plea agreement, is charged with taking $150,000 to $250,000 in kickbacks for steering addicted patients to a rehab facility that billed private insurance and required a 21-day stay before recruiters were paid; many patients allegedly left on exactly day 21. Christina Mareik of Whittier, first charged by complaint in June 2026, has now been indicted in a roughly $270 million Medi-Cal pharmacy scheme that allegedly exploited the program’s temporary suspension of prior-authorization requirements during a payment-system transition. Finally, Walnut physician Dejun Wang is charged with selling prescription drug samples, including Ozempic, Mounjaro and Rybelsus, to San Gabriel Valley pharmacies that repackaged and dispensed them.
The Young case is a reminder that private commercial coverage, not just Medicare and Medi-Cal, is a primary target of patient-brokering schemes, and that recruiters may manipulate enrollment to steer people into the richest-paying policies. The Tabaie case also illustrates the growing role of outlier analytics in detecting fraud; Assistant Attorney General Colin M. McDonald warned providers that “the data will lead us to you.” Officials’ loss figures vary somewhat: the release headline cites $2 billion, while a statement attributed to FBI Director Kash Patel puts losses at $1.8 billion. The earlier June 2026 Los Angeles takedown, linked above, also included a federal workers’ compensation fraud case against an Orange County psychiatrist.
All of these charges are allegations. As the Justice Department notes, indictments, complaints and informations are not evidence of guilt, and every defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt. Victims in the Tabaie matter can find case information on the department’s victim notification page, and more on the national strike force program is available from the Health Care Fraud Unit.