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With regard to this individual's actions, it does not sound like he is doing the right thing. To the extent that his insurance paid him, he had an obligation to pay his provider. Technically the money was not his to keep. As such, if the insurance company and/or the hospital got wind of what he did with the money, they may be able to sue him for fraud. This may become an even bigger issue if either entity decided to bring the illegal use of a Social Security number into the mix.
Yes, what he has done is defrauded the insurance company by making them think that he will be using the money to pay his providers but instead keeping the money. He has also defrauded the hospital into providing the care with no intention of paying them. Fraud can be punished both civilly and/or criminally (depending on how each entity wants to hold him responsible.) To the extent that he is using someone else's Social Security Number, that definitely has federal criminal liability (but again, the liability is only imposed if an entity wants to prosecute him.) To the extent that he is running a business that is not properly licensed and registered, that is a whole other matter that concerns the city and/or the Secretary of State.
Even if he decides to leave, it is important to note that to the extent that immigration gets wind that he has committed these actions, they may be a bar to him getting a future application to return to the country legally. Each immigration application requires you to disclose crimes and/or actions of moral turpitude, even if he is not prosecuted criminally; it is possible that immigration will view this negatively in light of any application he makes.
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