On October 22, 2023, the Department of Justice announced that it would be prosecuting its largest substance abuse treatment fraud scheme ever. Fifteen defendants, including individuals from Los Angeles, Texas, and Illinois, face charges for $2 billion in fraudulent government claims. The claims include “sham substance abuse treatment programs, unnecessary artery treatments, and bogus hospice services.”
Among the defendants is a father-son duo, Nathan and David Young, owners of “purported” drug treatment centers in Southern California. According to the indictment, their alleged scheme included “body brokers,” professionals seemingly hired to target patients around the country who had insurance plans with high reimbursement rates for substance abuse treatment. These patients are said to be found through substance abuse support groups, and often came from vulnerable populations. To lure them into treatment, patients were allegedly offered “free flights, money, apartments, hotel stays, cars, gift cards, marijuana, cigarettes, controlled substances (including illegal drugs), and other prescription medications” in exchange for their agreement to treatment. However, only patients with high rates of reimbursement were given “luxurious accommodations.” In reality, most individuals were living in cramped quarters in unsanitary and unsafe living conditions.
The treatment offered to patients could be described as minimal, at best. The Doctors are said to have provided patients with drugs, upon the patient’s request, and when individuals wanted to leave, they were drugged with medication to sedate and hinder them from leaving the facility. It is also reported that the employees at these facilities were instructed to teach patients to lie about their symptoms and encouraged patients to engage with substances to keep them in treatment. The professed “therapy sessions” offered to patients were on Zoom with hundreds of other participants, whose only requirement was to have their camera on. All of this “treatment” was billed by the Doctors to private insurance companies, amounting to $1.6 billion.
The Youngs were each released on $4 million bonds. Nathan Young’s attorney informed the public that he denies the allegations and plans to challenge the government’s case in court. David Young has made no public comment regarding his case.
Honey and Cody Phipps from Texas are also implicated in the health care fraud scheme with the Doctors. Allegedly, the two worked as body brokers, as stated in the indictment. The four, Nathan and David Young and Honey and Cody Phipps, were charged with multiple counts of healthcare fraud, violating the Eliminating Kickbacks in Recovery Act, and conspiracy. Another implicated member of the alleged scheme is an owner and director of one of the facilities, Nicholas Moore, who pled guilty to conspiracy and wire fraud connected to the broader substance abuse treatment fraud. Moore managed some of the treatment centers owned by the Youngs and admitted to submitting hundreds of millions of dollars worth of fabricated substance abuse claims.
The other defendants have been implicated in various alleged schemes, including invasive and unnecessary surgical procedures, hospice fraud, illegal healthcare kickbacks, Medi-Cal pharmacy fraud, and illegal drug distribution. Geoffrey Jimenez, “charged by complaint,” is implicated in a fraudulent hospice scheme. From his personal bank records, it was presumed that Jimenez received over $400,000 from the alleged scheme. Some of the defendants have been charged; however, a majority of the defendants remain under investigation by the Department of Justice with assistance from various administrative offices.