FBI Charges 15 in $2 Billion California Health Care Fraud Takedown After Predawn Raids

Federal agents fanned out across Los Angeles in predawn raids on Thursday, arresting medical professionals accused of running health care fraud schemes worth about $2 billion, the Justice Department said.

Prosecutors charged 15 defendants, including a cardiothoracic surgeon, a chiropractor and the operators of addiction-treatment centers. The schemes allegedly billed government and private insurers for unnecessary procedures, fake hospice care and addiction treatment that was never provided.

The largest case, prosecutors said, is a $1.6 billion sham substance-abuse operation, the largest of its type ever charged, according to the Justice Department.

A raid in Tarzana

Federal SWAT teams moved on the Tarzana mansion of Hany Malek, 61, a chiropractor accused of working with a cardiothoracic surgeon to bill Medicare for unneeded arterial procedures.

Malek is accused of posing as a medical doctor, diagnosing patients with arterial disease and sending them to Dr. Harold Tabaie, 78, of Anaheim, who allegedly performed atherectomies, procedures in which a bladed catheter clears plaque from arteries, on patients who did not need them. Prosecutors say Tabaie repeated the procedure on some patients he had already treated and that some patients were injured.

Authorities considered Malek potentially armed after learning he kept an arsenal in his home, according to the New York Post. Agents cut the mansion’s security gate, placed ladders against tall fences and set off flash-bang grenades before taking him into custody, the Post reported.

Body brokers and beach houses

Nathan Young, 39, and his father David Young, 71, are accused of trafficking addicts from around the country to dozens of Los Angeles rehab centers in a $1.6 billion scheme. Prosecutors allege the pair directed “body brokers” to target homeless people and addicts in support groups, ply them with drugs and place them in hotels and trap houses, then bill insurers for therapy the patients never received. Some were told they could simply “lay out on the beach,” according to court papers cited by the Post.

Other defendants face charges over fake hospice programs: prosecutors allege more than $140 million in Medicare billings across three schemes for patients who were not terminally ill. Another defendant, previously charged in a $270 million Medi-Cal pharmacy scheme involving bogus prescriptions, was indicted again.

Illegal kickback schemes tied to unneeded genetic testing were also charged.

The defendants were expected to make initial court appearances in downtown Los Angeles on Thursday. Prosecutors said they would release more details at a press conference later in the day.

“It is especially egregious when doctors and other health care professionals, who pledged to do no harm, resort to petty greed and criminality,” First Assistant U.S. Attorney Bill Essayli said. “Every dollar drained from our private and public health insurance systems is one less dollar available to those who truly need it.”

A wider enforcement push

The takedown comes during a broader federal crackdown on health care fraud. In June, the Justice Department charged 455 defendants in what it described as a $6.5 billion national takedown across 45 states and territories.

The bust also follows scrutiny of California’s health programs: the Centers for Medicare and Medicaid Services is withholding another $1.2 billion in Medicaid reimbursements to California while it reviews the state’s fast-growing personal care program, a freeze CMS Administrator Mehmet Oz announced Tuesday. The state already faced a separate $1.3 billion withholding announced in May over suspected fraud in hospice and in-home care programs.

Reporting based on coverage by the New York Post and KABC.