Father-son duo charged with $1.6 billion rehab fraud

Prosecutors say the Youngs had patients "drugged with medication" and "cut off from communication with family members" to prevent them from leaving.LOS ANGELES (CN) — A father and son from Los Angeles have been charged with what the U.S. Department of Justice calls the “largest substance abuse treatment fraud scheme ever prosecuted.”Nathan Young, 39, and his 71-year-old father, David, owned dozens of drug treatment facilities in Southern California, according to federal prosecutors in an indictment filed Wednesday. The treatment centers had such names as Helping Hands Rehabilitation, Get Real Recovery and Sunset Rehab. Prosecutors say the Youngs employed “body brokers” to travel around the country find as many patients as they could — particularly patients who were eligible for good health insurance plans that reimbursed for substance abuse treatment at a relatively high rate.Over the course of six years, prosecutors say in the indictment, the Youngs submitted more than $1.6 billion in false or fraudulent claims to various insurance companies. They purportedly received more than $210 million.According to the Justice Department, the Youngs offered patients illegal kickbacks — “including money, drugs, free airline flights, free or nearly free accommodations at highly desirable locations” — in exchange for them agreeing to be treated. The feds claim the Youngs would then bill insurance companies for treatment, whether or not the patients actually needed it.At times, prosecutors say in their indictment, patients were even encouraged to use drugs or alcohol to fail urine tests and remain eligible for detox services. They also point to remote Zoom therapy sessions with little participation“Defendants would submit and cause the submission of false and fraudulent claims to insurance companies via interstate wires for patients attending purported therapy sessions conducted remotely on Zoom where no therapy was provided,” prosecutors write. “Often, as many as approximately 100 patients would be logged into one Zoom session at a time and patients would not be expected to be on camera or to participate in therapy. In fact, no therapy would be provided during these Zoom sessions. In many instances, patients would be in the Zoom session for no more than approximately one to five minutes.”To prevent patients from leaving, prosecutors say, the Youngs had them “drugged with medication, cut off from communication with family members, prevented from accessing their belongings and physically blocked.”The Youngs were arrested last week, and after a brief court appearance were each released on $4 million bonds.Nathan Young’s attorney, Reuven Cohen, said in a written statement: “Mr. Young denies the allegations and looks forward to challenging the government’s case. We will address the government’s claims in court.”In a court document filed last week, Nathan Young asked to be released.“Nathan Young has shown this court exactly who he is,” his attorney wrote. “He knew he was under investigation, offered to surrender his passport and post bond, and never fled. When the agents arrive at the doorstep, he and his father submitted without incident. The Youngs are family men with deep roots here, and they have every reason to stay and defend themselves.”David Young’s attorneys did not respond to an email requesting a comment.The Affordable Care Act of 2010 — also known as Obamacare — made it illegal for insurance companies to deny coverage based on preexisting conditions. It also made mental health and substance abuse treatment essential health benefits, guaranteeing coverage. That led to a boom in the drug treatment industry, as rehabs could suddenly bill insurance companies for everything from urinalysis tests to group therapy sessions. It also led to numerous instances of fraud.In 2020, Chris Bathum, who owned a chain of some 20 drug treatment centers and sober living homes, was sentenced to 52 years in prison for sexually assaulting female patients and for fraudulently billing insurance companies.Two years later, Jonathan and Daniel Markovich were sentenced to more than 15 and 8 years in prison, respectively, for billing insurance companies $112 million for medically unnecessary drug treatment services, all the while paying kickbacks to patient recruiters and receiving kickbacks from laboratories.And last month, the owner of a drug rehab in Arizona was sentenced to 14 years for fraudulently billing Medicaid $69 million in a single year.“It is especially egregious when doctors and other healthcare professionals, who pledged to do no harm, resort to petty greed and criminality,” said First Assistant U.S. Attorney Bill Essayli in a written statement. “Every dollar drained out of our private and public health insurance systems is one less dollar available to those who truly need it.”Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads