Author: Sophie Blaicher

Largest Health Care Fraud Scheme Uncovered by the Department of Justice

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. 

Organ on a Chip – The Future of Drug Testing and Development

Organ chip technology is transforming modern research because it mimics personalized organ systems and will serve as an alternative to animal testing and other testing methods. The organ on a chip is the size of a coin, clear and flexible with a two-channel microfluidic chip separated by a cell-permeable membrane. The microfluidic chips mimic organ functions or states in the body. The cell-permeable membrane is thin and can be stretched by a vacuum to allow for cellular communication between microfluidic chips. A tissue-specific support layer covers the cell-permeable membrane to aid in tissue growth and maturation. Organ chips are grown in a small device that controls chip movement so it can properly demonstrate the functions of the body. 

The first organ on a chip was developed in the 2000s. It was designed to model excess fluid accumulation in diseased lungs. The organ chip mimicked the airways in the lungs and even made a similar “crackle” noise, a symptom in patients with diseased lungs. Following the development of the lung chip in 2010, fifteen more chips were developed after other organs and systems in the body and can even mimic diseases and genetic disorders in the body. Beyond human systems, organ chips have been developed to model dogs, rats, and mice. 

As opposed to traditional animal testing methods, organ on a chip provides information about a drug’s effect specifically on human cells. Organ on a chip technology is intended to accurately represent the body’s organs and functions on a small, simple to use device to support a faster way to test the impact of drugs and their doses on the body. The technology is capable of determining whether new drugs are safe by discovering early warning signs which helps researchers accurately understand disease effects on the body. This information and technological ability can lead to tailored treatments for individuals by providing researchers information on how specific people will respond to a drug. A “Patient-on-a-Chip” program is being developed to provide patients with tailored treatments to make care safer and more effective. Scientists collect blood or skin cell samples that are converted into special stem cells and then created into organ cells containing the person’s genetics. Scientists can test drugs on the organ chips and see how the specific person would respond before the person takes the medicine.

Since this is a novel technology, regulatory agencies can be less likely to accept the data from an organ chip and may require additional information to confirm the accuracy of the findings. However, the Food and Drug Administration (FDA) has conveyed interest in organ chips through working with pharmaceutical industries to help further develop the technology. In April 2025, FDA announced that the administration would be phasing out animal testing in replacement of human based models, such as organ chips. To implement this change, FDA will be updating policy and regulations to allow for new methods during drug testing. In doing so,  FDA expects that this will accelerate drug testing and reveal human-specific side effects that may not be revealed during animal studies. The Human Liver-Chip was recently accepted into FDA’s Innovative Science and Technology for Advancing New Drugs pilot program, which allows for the use of drug development tools that do not meet regulatory standards but provide supportive data. This program is intended to aid in the acceptance of new drug development tools. 

NASA has also expressed interest in the technology and plans to send organ chips to the Moon to study effects of gravity and space radiation. Microgravity from space travel can make the human body age at an accelerated rate. Researchers developed a program called Tissue Chips in Space 2.0 that sends organ chips to the International Space Station with the goal of studying the effects of microgravity to understand how diseases develop, test treatments, and improve astronaut health during space travel. 

Intentional Genomic Alterations: A New Development in Animal Biotechnology

The livestock industry relies on traditional breeding methods for desired traits, but this is costly and limits which animals can be bred. Intentional Genomic Alterations (IGAs) are being developed in animals to give desired traits faster. IGAs make targeted and random DNA sequence changes to an animal’s genomic DNA. This is especially helpful for the livestock industry because traditional breeding methods only give traits to offspring, but IGAs can give traits to an entire generation at once. Scientists found a gene called PRLR that, when altered, creates short, slick hair in cattle, more commonly referred to as SLICK. SLICK enhances heat stress tolerance and reduces disease susceptibility. This is especially useful for cattle farms in tropical climates because heat stress can affect milk yield and fertility. There are three cattle breeds with SLICK in the United States and Brazil. The Food and Drug Administration (FDA) approved SLICK cattle as safe for human consumption in 2022. 

The FDA regulates IGAs in animals by reviewing the product claim, how the IGA was produced and introduced to the animal, the characteristics given to the animal, the animal’s health, the durability of the desired effect, the environmental impact, whether it is safe for human consumption, and the effectiveness of the IGA. In May 2024, the FDA announced it would be collaborating with the EPA and USDA to ensure sustainability and safety in the biotechnology of IGAs. IGAs are being developed for uses other than for the livestock industry, including: biopharmaceuticals, research, xenotransplantation, therapies in companion animals, disease resistance, and food supply. There have already been drugs from IGAs approved by the FDA. A recombinant anti-thrombin drug was developed from the milk of transgenic goats. To create the drug, human DNA is inserted into the cells of goats and excreted from the offspring’s milk. The drug is in clinical trials and, if successful, will be more cost-effective than current drugs on the market for coagulation disorders.

Some IGAs are still in the developmental stage. Revivicor is a xenotransplantation company aiming to make pig kidneys and hearts viable for human transplant. Organs from another animal will be rejected by the body immediately upon implantation, but Revivicor is using IGAs to combat organ rejection. There are 10 genes in the pig genome that are edited through mutation and by adding human genes. 

Despite the benefits that IGAs may bring, there are ethical concerns for animal welfare. Making IGAs is inherently invasive and subjects the animals to surgeries, tissue sampling, and possible complications resulting in disability or death. IGAs are still in the conception stage and will have effects on the food supply, pets, pharmaceutical products, and other developments. There are areas of research of animals with IGAs that need more information, and there could be unanticipated results and concerns. For example, animal clones, copies of animals traditionally bred, have been limited recently because the offspring of the cloned animals developed varying abnormalities. Unforeseeable results are possible; however, the most recent development in IGA information is a new approval process for heritable IGAs released by the FDA. There are two parts, the first part categorizes IGAs based on their risk. Higher-risk IGAs will need the FDA’s full approval. The second part provides a guide for developers of higher-risk IGAs by giving guidelines of what is needed for the FDA to evaluate the products. This new approval process is an important step towards regulating IGAs, but it also emphasizes the need for continued research and ethical consideration.