Feds Charge 15 in $2 Billion California Healthcare Fraud Sweep
Prosecutors say the sweep includes the largest sham substance-abuse treatment scheme the Justice Department has ever brought, plus unnecessary surgeries, hospice fraud and kickbacks.
Federal prosecutors unsealed indictments Thursday charging 15 people, including six medical professionals, in a series of California healthcare fraud schemes that together generated nearly $2 billion in allegedly fraudulent claims.
Eight of the defendants were arrested Thursday. The cases span sham substance abuse treatment, medically unnecessary surgeries, hospice fraud, genetic-testing kickbacks and prescription drug schemes.
The largest case alleges a $1.6 billion substance-abuse operation. Prosecutors say four defendants recruited homeless people and addicts from across the country and brought them to addiction treatment facilities in Southern California and elsewhere. The recruiters offered free flights, housing, money and drugs to attract patients with high-paying insurance policies.
Once there, patients were cycled through treatment facilities whether or not they needed treatment, prosecutors allege. Some were prevented from leaving. Others were given drugs to keep them enrolled. A fifth defendant, who managed some of the facilities, has pleaded guilty to conspiracy to commit healthcare fraud and wire fraud.
The Justice Department described it as the largest substance abuse treatment fraud scheme it has ever prosecuted.
A second case centers on an Anaheim cardiothoracic surgeon and a Tarzana chiropractor. Harold Tabaie and Hany Malek were charged in a $135 million scheme built around medically unnecessary atherectomies, procedures that clear plaque from arteries, at two Los Angeles clinics.
Prosecutors allege Malek posed as a physician and recommended the invasive procedures to patients who did not have arterial disease. Tabaie performed them, and some caused patients significant pain and discomfort. Investigators flagged the case through data analytics that caught Tabaie’s unusually high volume of atherectomy billing.
Three separate hospice cases account for more than $138 million in alleged fraudulent Medicare claims. Geoffrey Jimenez allegedly ran hospice companies that enrolled beneficiaries who were not terminally ill and billed Medicare for care that was unnecessary or never provided. Dr. Richard Keech allegedly signed false terminal-illness certifications for patients who had not chosen hospice care. Armani Raffi was charged with running four interconnected hospice agencies built on falsified records, kickbacks and patient transfers.
Two more physicians, Hassan Badday and Robby Ayoub, were charged with taking illegal payments in exchange for authorizing medically unnecessary genetic tests. A marketer for a Houston-based laboratory, ApolloMDx, allegedly obtained DNA samples from Medicare beneficiaries, and the resulting test orders generated more than $5.5 million in claims.
Christina Mareik of Whittier was indicted in a $269 million Medi-Cal pharmacy scheme. Prosecutors say the scheme exploited a temporary suspension of prior-authorization requirements under California’s Medicaid prescription drug program, pushing thousands of fraudulent prescriptions for medically unnecessary medications through Monte Vista Pharmacy. Medi-Cal paid about $179 million of the $269 million in allegedly fraudulent claims.
Other charges included referral kickbacks and drug diversion. Thomas Mladinich of Newport Beach was charged with taking between $150,000 and $250,000 in illegal kickbacks for steering patients to an addiction treatment facility. Dr. Dejun Wang of Walnut was charged with unlawfully selling prescription drug samples, including Ozempic, Mounjaro and Rybelsus, to pharmacies that allegedly repackaged and dispensed them.
The investigations involved the FBI, the Department of Health and Human Services inspector general, the Drug Enforcement Administration and IRS Criminal Investigation. Officials said billing data analytics played a central role in uncovering the suspicious patterns, and they expect asset forfeiture and victim notifications to follow.
“It was exploitation,” said Colin McDonald, assistant attorney general of the Justice Department’s National Fraud Enforcement Division. Bill Essayli, the U.S. Attorney for the Central District of California, called it one of the biggest fraud takedowns in the state’s history. “California has a fraud problem,” Essayli said. “I dubbed California the kingdom of fraud.”
The charges are allegations. Defendants who have not pleaded guilty are presumed innocent unless proven guilty in court.
