Federal authorities on Thursday charged 15 people—including six medical professionals—with orchestrating a $2 billion healthcare fraud scheme in California, marking one of the largest enforcement actions of its kind in state history.
The U.S. Department of Justice alleged that defendants lured vulnerable patients into unnecessary medical procedures, sham substance abuse treatments, and fraudulent hospice care, submitting fraudulent claims to government and private healthcare programs. The charges encompass $1.6 billion in alleged fraudulent billing tied to a scheme involving sham sober living homes and $135 million in unnecessary atherectomies, an invasive arterial procedure.
Eight defendants were arrested during predawn raids across Southern California, with additional defendants scheduled to appear in courts in Texas and Illinois. The Justice Department described the operation as one of the top dollar take-downs in California’s history and the largest sober home fraud scheme ever prosecuted by federal authorities.
Core Allegations and Key Defendants
Federal prosecutors outlined multiple schemes, including:
Sober Home Fraud: Two Los Angeles residents were charged with paying “body brokers” in Texas to recruit homeless individuals and those in 12-step programs into sham sober living homes in California. Prosecutors allege these individuals were then signed up for expensive insurance policies and left in decrepit housing conditions without receiving treatment.
Unnecessary Medical Procedures: An Anaheim cardiothoracic surgeon, Dr. Harold Tabaie, 78, and a Tarzana chiropractor, Hany Malek, 61, were charged in a $135 million scheme to bill Medicare for medically unnecessary atherectomies. Prosecutors allege Malek posed as a medical doctor to diagnose patients with arterial disease and recommend the procedures, even when patients did not have the condition.
Hospice Fraud: Three additional defendants were charged with pressuring local seniors into hospice care despite none being terminally ill. Prosecutors described Los Angeles as “ground zero” for this form of fraud.
Official Responses and Enforcement Actions
Assistant U.S. Attorney General Colin McDonald, of the Justice Department’s National Fraud Enforcement Division, stated that the schemes were not about medical treatment or recovery but exploitation of vulnerable individuals. He emphasized that the operation was detected through data analytics, which flagged suspicious billing patterns.
U.S. Attorney for the Central District of California Bill Essayli described California as having a “fraud problem,” stating that the state’s enforcement efforts have been insufficient. He remarked, “California does fraud best … California does nothing—nothing—to prevent fraudsters from getting money.”
Federal authorities did not immediately confirm whether any of the defendants had legal representation. The five arrested in Los Angeles were expected to make their initial court appearances the same day, while two others were scheduled to appear in Texas and one in Illinois.
Scale and Scope of Alleged Fraud
The Justice Department described the case as one of the largest healthcare fraud enforcement actions in California’s history, with $2 billion in alleged fraudulent claims submitted to government and private insurance programs. The alleged schemes spanned multiple regions, including Los Angeles, Texas, and Illinois, and involved collaboration between medical professionals, body brokers, and operators of sham facilities.
Prosecutors noted that the sober home fraud scheme alone accounted for over $1.6 billion in billed services, making it the largest of its kind ever prosecuted by the department. The enforcement action follows a broader federal crackdown on healthcare fraud, with authorities signaling that data-driven investigations will continue to uncover similar schemes.
Next Steps in the Legal Process
The defendants, if convicted, face significant prison sentences and financial penalties, including potential forfeiture of assets linked to the alleged fraud. Federal authorities have not indicated whether additional charges or arrests are expected in connection with the investigation. The case is ongoing, with court proceedings expected to unfold in the coming weeks.