The Justice Department’s October 22 announcement pairs what DOJ calls its largest sober-home fraud case with cases flagged by billing analytics, a combination that speaks directly to how treatment integrity is policed.

By PDMPNews Staff

Charges are allegations. Nicholas Moore has pleaded guilty, and DOJ describes a plea agreement with Thomas Mladinich. All other defendants are presumed innocent unless proven guilty in court.

What DOJ announced

On October 22, 2026, the U.S. Department of Justice (DOJ) announced a Los Angeles health care fraud takedown with 15 defendants charged, according to DOJ, including six medical professionals. DOJ says the schemes “collectively resulted in over $1.8 billion in fraudulent claims to government and private health care programs.” Eight defendants were arrested that day.

These are amounts allegedly billed or claimed, not proven losses, which is worth remembering when reading the release’s headline phrase “Nearly $2 Billion in Loss.”

The release covers several distinct cases:

  • An alleged substance use treatment scheme that billed private insurers more than $1.6 billion, which DOJ calls “the largest case of its type ever prosecuted by the Department.”
  • An alleged Medicare scheme involving unnecessary atherectomies, an invasive procedure to clear plaque from arteries, described in the case section as a “$135 million scheme” (the release’s summary paragraph gives $134 million).
  • Three hospice cases that DOJ summarizes as “over $138 million fraudulently billed to Medicare.”
  • Kickback, drug-sample and Medi-Cal (California’s Medicaid program) pharmacy cases.

Assistant Attorney General Colin M. McDonald of DOJ’s National Fraud Enforcement Division framed the announcement this way: “These charges include the largest sober home fraud scheme the Department has ever prosecuted, and a scheme involving unnecessary invasive procedures detected through data analytics.”

The sober-home case, as alleged

Nathan Young, 39, and David Young, 71, both of Los Angeles, and Honey Phipps, 42, and Cody Phipps, 36, both of Greenville, Texas, are charged with a years-long scheme to bring people from around the country to Southern California and elsewhere for what DOJ calls “sham substance abuse treatment.”

According to the indictment, as described by DOJ:

  • The Youngs, father and son, “controlled dozens of purported substance abuse treatment companies.”
  • They allegedly directed “body brokers,” including the Phippses, to recruit people who were unhoused, living in poverty or attending support groups, favoring those with the most generous insurance.
  • Alleged inducements included flights, money, housing, cars, gift cards, “controlled substances (including illegal drugs), and other prescription medications freely dispensed by doctors employed by the Youngs.”
  • Patients were allegedly recycled through facilities to keep billing, and the Youngs allegedly “directed that patients be drugged with medication” to “knock the client out” if they tried to leave.
  • “Therapy” allegedly consisted of Zoom sessions with more than 100 attendees.

All four are charged with conspiracy to commit health care fraud and wire fraud, conspiracy to violate the Eliminating Kickbacks in Recovery Act (EKRA), and substantive counts. The Federal Bureau of Investigation (FBI), Internal Revenue Service Criminal Investigation (IRS-CI) and the Drug Enforcement Administration (DEA) are investigating.

David Olesky, Special Agent in Charge of DEA’s Los Angeles Field Division, said: “By diverting critical funding from a vulnerable community, the accused stripped away a vital lifeline for those seeking addiction recovery support.”

A guilty plea and a second treatment case

Nicholas Moore, 33, of North Myrtle Beach, South Carolina, pleaded guilty to conspiracy to commit health care fraud and wire fraud in connection with the Young enterprise. DOJ says that as an “area manager” for several Young facilities, including detox facilities, Moore admitted to assisting in the submission of $199 million in fraudulent claims to insurers.

A separate case also involves addiction treatment. Thomas Steven Mladinich, 38, of Newport Beach, California, was charged by information with receiving illegal kickbacks for referring patients to a licensed rehabilitation facility. DOJ states that “as alleged in the information and admitted in the plea agreement,” he received payments including a $33,000 check, and between $150,000 and $250,000 in total. The facility owner allegedly required patients to stay at least 21 days before recruiters were paid, and DOJ reports that “[m]any patients left exactly on day 21, against medical advice.” The release does not say whether a court has accepted the plea or imposed a sentence.

That 21-day detail matters. When payment terms shape length of stay, clinical decisions can follow the money rather than the patient.

Analytics as the starting point

Two other sets of cases show how billing data now drives enforcement.

  • Atherectomies: Dr. Harold Tabaie, 78, a cardiothoracic surgeon, and Hany Malek, 61, a chiropractor, are charged with billing Medicare for allegedly unnecessary procedures at two Los Angeles clinics. DOJ states the case “was identified through data analytics that indicated Tabaie was an extreme outlier for billing atherectomy procedures in the United States,” and includes a chart covering 2016 through 2023.
  • Hospice: The hospice cases rest heavily on live-discharge patterns. Transitions Hospice, operated by Geoffrey Jimenez, according to the complaint, had a non-death discharge rate of about 85%, “more than four times the national average.” Hospices that Armani Raffi allegedly ran had non-death discharge rates “three to five times the national average,” according to court documents.

This approach has institutional backing. In June 2025, DOJ announced a Health Care Fraud Data Fusion Center combining DOJ, U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG), FBI and other analysts to use “cloud computing, artificial intelligence, and advanced analytics.” DOJ’s June 2026 national takedown said the center “used advanced analytics in many of the cases charged,” and described an agreement giving DOJ’s Fraud Division space in the Centers for Medicare & Medicaid Services (CMS) Integrated Data Repository. The same release described a hospice owner charged with allegedly buying decedents’ data “to avoid detection,” a sign that schemes adapt to the metrics used to find them.

A control gap during a system transition

Christina Mareik, 61, is charged with allegedly exploiting Medi-Cal’s suspension of prior authorization, which DOJ says was “part of an ongoing transition of Medi-Cal’s prescription drug program to a new payment system.” DOJ alleges approximately $269 million in false claims. Whatever the case’s outcome, the allegation points to a familiar risk: controls are most vulnerable while systems are being replaced.

Why it matters for PDMPs

DOJ’s release does not say that prescription drug monitoring program (PDMP) data was used in any of these cases. The analysis below is PDMPNews’s, not DOJ’s.

  • Controlled substances are part of the alleged sober-home scheme. The indictment, as described, alleges that controlled substances and prescription medications were used as inducements and that patients were medicated to keep them in place. DEA is among the investigating agencies, and in DOJ’s release its Los Angeles Special Agent in Charge credits the agency’s Diversion team by name. To the extent controlled medications were prescribed and dispensed through pharmacies, they would be the kind of activity a state PDMP records. Drugs handed out directly by practitioners may or may not be captured, depending on state dispensing rules, and illegal drugs never are.
  • Detection here came from claims data. Medicare outlier analysis and hospice discharge rates did the work. The $1.6 billion case involved private insurance claims, which sit outside Medicare data.
  • Treatment integrity is becoming a cross-agency data question. Patterns such as many out-of-state patients, a single prescriber group and repeated sedating prescriptions are the patterns PDMP analytics and unsolicited reports are designed to surface, within each state’s access laws.
  • System migrations need guardrails. For any PDMP modernization, the Medi-Cal allegation is a caution: when legacy controls pause, someone must own the risk.

The history is long. Arizona’s Medicaid agency, for example, suspended payments to more than 100 behavioral health providers in 2023 over credible allegations of fraud. The problem has scaled, and so have the tools to find it.

What remains unknown

DOJ has not said how the sober-home case was first detected, and the release includes no case numbers. Apart from Moore’s guilty plea and Mladinich’s plea agreement, every defendant is presumed innocent.

References

Arizona Health Care Cost Containment System. (2023, May 16). Ensuring member safety and access to needed health care services is top priority [Press release]. https://www.azahcccs.gov/shared/News/PressRelease/PaymentSuspensions.html

U.S. Department of Justice, Office of Public Affairs. (2025, June 30). National health care fraud takedown results in 324 defendants charged in connection with over $14.6 billion in alleged fraud. https://www.justice.gov/opa/pr/national-health-care-fraud-takedown-results-324-defendants-charged-connection-over-146

U.S. Department of Justice, Office of Public Affairs. (2026, June 23). National health care fraud takedown results in 455 defendants charged in connection with over $6.5 billion in alleged fraud. https://www.justice.gov/opa/pr/national-health-care-fraud-takedown-results-455-defendants-charged-connection-over-65

U.S. Department of Justice, Office of Public Affairs. (2026, October 22). Los Angeles health care fraud takedown results in charges against 15 defendants, including 6 medical professionals, nearly $2 billion in loss. https://www.justice.gov/opa/pr/los-angeles-health-care-fraud-takedown-results-charges-against-15-defendants-including-6