Facilities submitted claims exceeding $1.6 billion and collected over $210 million
Federal prosecutors charged Nathan Young, a Southern California drug-rehab operator, and his father, David Young, with healthcare fraud and violating an anti-kickback statute. A recently filed criminal complaint says facilities associated with Nathan Young submitted more than $1.6 billion in claims to major health insurers and were paid over $210 million between 2020 and 2026.
According to an FBI affidavit, the Youngs directed employees to lure patients to their programs by offering illegal kickbacks including money, drugs, free airline flights and free accommodations. The affidavit also says employees were told to coach incoming clients to fabricate substance addictions so the clients would appear eligible for detox services and stay longer, even when unnecessary, so the facilities could bill more.
Federal prosecutors allege the scheme included giving recovering addicts illegal drugs to keep billing insurers for treatment. The complaint cites claims for “non-existent and woefully inadequate ‘therapy’ sessions,” prosecutors said.
In a 2023 message exchange quoted by federal authorities, an unnamed cooperating witness asked Nathan Young how to bill an insurer for someone in his program who was clean. Federal authorities quoted Young writing, “Either research chemicals or mental health,” in the exchange. Investigators said the person’s insurance was being billed for substance abuse treatment at the time.
Before the criminal charges, Aetna alleged in a civil suit that Nathan Young and others defrauded the insurer of at least $40 million for fabricated addiction treatment at about a dozen facilities, which Aetna described as “drug dens.” Young’s attorneys denied the allegations and settled the suit earlier this year.
Young’s attorneys also recently settled cases involving 92 people, including 16 children whose parents died at his facilities, according to Karen Gold, who represented the plaintiffs.
The criminal case came after a Wall Street Journal investigation last year into alleged widespread fraud in America’s rehabilitation industry. The investigation said the problem has become especially prevalent in California, where operators have discovered a steady stream of revenue by luring people with addiction from across the country and billing their private insurance.
Patients often come through recruiters, widely known in the industry as body brokers, who are paid to target people addicted to drugs with promises of recovery at California seaside rehabs, the investigation said. Many body brokers sign patients up for private insurance plans that offer high reimbursement rates and few restrictions.
The investigation said operators kick patients out without support or referrals when the money runs out, regardless of whether the patients have recovered. The industry calls the practice patient dumping or curbing.
Nathan Young, known to his clients as Pablo, was featured in the investigation. In response, Young said, “everyone, regardless of their past, deserves a chance at a healthy life, and despite a relentless series of baseless attacks on me and my work, I will do whatever I can to offer them a path to be productive members of my communities.”
The investigation also described Nathan Young’s former clients Penny Lamb and Jeffery Lichtenberg, an Oklahoma couple who were shuttled between Southern California properties where illicit drugs were common and whose treatment included logging onto crowded video calls. The couple relapsed often and eventually became homeless.
Lichtenberg said he was now sober, living in a home and working in North Carolina with Lamb. He said Nathan Young got what he deserved and added, “It sucks for him but you can’t treat people like he did and not expect karma in return to be good to him.”
The Youngs were arrested last week. Lawyers representing them did not respond to requests for comment.