DOJ Charges Sham SUD Network in $1.6B Fraud Scheme
Behavioral Health Business
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Fraud
U.S. Department of Justice officials in the Central District of California have charged a father-son duo in what officials say is the largest substance abuse treatment fraud scheme in U.S. prosecution history, which encompasses $1.6 billion in alleged false claims.
David and Nathan Young, the owners and operators of more than 20 addiction treatment facilities in Southern California, allegedly worked with body brokers to recruit and refer vulnerable unhoused or impoverished patients facing addiction to get treatment at their facilities. The brokers were instructed to seek out patients who had commercial insurance policies with generous reimbursements, according to court documents.
Between May 2020 and May 2026, they billed $1,619,276,243 in false claims to commercial insurers and received over $210 million in payments.
The charges come amid an ongoing wave of intensified government crackdowns on healthcare fraud, waste, and abuse. In June, the DOJ filed charges in 39 cases of suspected behavioral health billing fraud. Among the 39 cases, addiction treatment providers accounted for 68.7% of total suspected fraud.
Patient Recruitment and Experience
Body brokers for the California locations gave targeted patients hotel stays, dinners, and other benefits, while other patients reported living in cramped “trap house” style locations. Patients were also allegedly bribed with free flights, money, cars, cigarettes, marijuana, and access to illegal drugs to come to the California-based facilities.
Once there, the owners did not allow many to access their own belongings, physically blocked some from leaving locations, and even asked patients to fabricate symptoms so they would be eligible for detox services the facilities could bill for. In some cases, patients were encouraged to use substances to become “eligible” for detox services. After detox, the treatment and therapy primarily consisted of Zoom sessions logged in via a single cell phone, which was muted with the camera off, “that was placed on the kitchen island while patients went about their day,” court documents state.
One unnamed patient reported never attending a single therapy session throughout 13 months in one of their programs. Other experiential therapies that were reportedly promised to patients included yoga, meditation, art therapy, and music therapy, but these were either not provided or merely superficially offered.