The U.S. Justice Department charged several people with fraud involving numerous Los Angeles area drug rehabs. It’s the largest alleged substance abuse treatment center fraud scheme ever prosecuted by the DOJ. The investigation was announced on October 22, 2026.
Unfortunately, vulnerable patients are too often the true victims when rehabs are guilty of fraud or neglect. Rehab owners can face criminal punishment, but victims and their families can also file separate civil lawsuits to get help with recovery.
Maison Law holds negligent drug treatment centers and sober homes responsible.
If you think you were falsely imprisoned or a victim of neglect at Rodeo Recovery, Helping Hands Rehabilitation, Get Real Recovery, Sunset Rehab or other facility operated by Nathan Young or David Young, contact us today for a free consultation.
Note: This is a developing story. Neither Nathan Young or David Young has been proven guilty; they have just been charged. Also, IF negligence occurred, victims would not need to wait for a conviction. They should seek legal advice asap.
Compensation and Causes of Action:
If some of the alleged abuse is true at one of these rehab facilities or any other rehab facility, people might be able to file a lawsuit for these and/or other things:
- Negligence (including unsafe conditions, careless hiring or supervision of staff)
- Medical Negligence (including poor detox, medication or clinical care by a licensed provider)
- False imprisonment (including keeping a patient from leaving, such as holding their ID or phone, or using threats or locked doors)
- Battery and medical battery (including unwanted touching, or drugs or treatment given without consent)
- Human trafficking (including forced labor or control of a person for profit)
- Intentional infliction of emotional distress (outrageous conduct that causes severe emotional harm)
Health Care Fraud Charges for Los Angeles Rehab Owners:
Federal investigators filed charges against 15 or more people accused of health care fraud. The cases included several suspects indicted for allegedly defrauding insurers by taking advantage of Substance Use Disorder (SUD) patients.
The Drug Rehab portion of the sting involves over $1.6 billion reportedly billed in a plan to lure SUD sufferers to treatment centers and sober homes in the Los Angeles area.
A father and son from Los Angeles, reportedly controlling several Southern California sober living facilities, are at the center of the investigation. The DOJ says that David Young (71) and Nathan Young (39) operated Los Angeles rehab centers including:
- Rodeo Recovery
- Helping Hands Rehabilitation
- Get Real Recovery
- Sunset Rehab
The FBI claims the two profited by charging their patients’ insurers for “sham substance abuse treatment.”
Also indicted were two people from Greenville, Texas, who allegedly recruited SUD patients around the country and directed them to Southern California for treatment. Honey Phipps (42) and Cody Phipps (36) are accused of being recruiters for the operation for years.
Another person involved with the rehab businesses, Nicholas Moore, 33, of North Myrtle Beach, South Carolina, pleaded guilty to conspiracy to commit health-care fraud and wire fraud. The DOJ says he admitted to helping submit $199 million in fraudulent claims while managing some of the rehab homes for David and Nathan Young.
How Body Brokering and Patient Mills Can Help Defraud Insurers:
The Phipps stand accused of being “body brokers” for the purported fraud scheme. “Body brokering” is a term used to describe the illegal practice of recruiting patients to treatment centers with the promise of things like money, care, and room and board.
In this case, federal investigators believe patients were promised help with addiction and offered free travel, cash, hotel stays, cars, illegal drugs, and prescription medications.
The SUD patients with the strongest insurance coverage were allegedly brought in so that the insurers could be billed and overcharged for services and care. Investigators say they found that some services weren’t needed or were never administered.
Prosecutors also point to a system of patient cycling, sometimes known as a “patient mill,” that may have helped keep victims in homes. In the system, patients may be illegally kept in facilities, or transferred to other locations under the same owners, so that their insurance can continue to be charged.
The Harm to SUD Patients:
Federal investigators, including the Drug Enforcement Administration (DEA), say their investigation uncovered more than just healthcare fraud.
Patients also allegedly suffered neglect and even physical harm while they stayed at the rehabs involved.
David Olesky, Special Agent in Charge of the DEA Los Angeles Field Division, described the dangerous treatment of patients:
“By diverting critical funding from a vulnerable community, the accused stripped away a vital lifeline for those seeking addiction recovery support.”
With the help of text and email evidence and witness testimony, the owners named in the drug rehab takedown are also accused of some dangerous treatment towards vulnerable patients:
- Failing to provide patients with the care and inducements promised
- Failing to provide the care promised to the patient’s families
- Drugging patients so they couldn’t leave
- Physically keeping patients from leaving
- Preventing patients from contacting their families
- Asking patients to fake their symptoms and issues to stay in the program
- Allowing patients to skip therapy sessions
Contact a Drug Rehab Negligence Lawyer:
If you or a loved one were hurt at a California rehab clinic, don’t delay in contacting a California Negligent Drug Rehab Attorney for a free case consultation.
It’s a no-risk, confidential way to find out how to seek justice for yourself or a loved one. We can help victims in California and victims who were hurt in the Los Angeles area but live in another state.
