What is Treatment Fraud?

Predatory Treatment Fraud – How Did We Get Here?

The onus has always been on the consumer to be able to find treatment and recovery residences. Whether it is for themselves, a family member, or another loved one, finding a slot the moment that services are needed can be extremely difficult. There are many barriers at play, from insurance coverage, to availability of local facilities, to length of the existing waiting lists.

Those seeking treatment are already in a vulnerable state. Patient brokering, deceptive marketing, and outright fraud is making an already difficult process that much harder. By addressing this situation through multiple lenses, from civil rights to consumer protection, from victims’ services to Medicaid fraud, the attorney general community can ensure the safety of those seeking treatment for substance use.

The issue of predatory treatment practices was first highlighted for the public in 2017 with the Kenneth Chatman case, which involved substance use treatment centers and recovery residences. Instead of providing a safe and sober living environment, Chatman enticed his insured patients with drugs, free or reduced rent and gift cards. He also trafficked female patients. The profit for Chatman was in relapse, rather than treatment, since insurance companies would continue to pay. Chatman’s scam, known as the “Florida shuffle,” became synonymous with patient brokering, leading some to believe this type of scam was limited to Florida. That is not the case.

In Pennsylvania, Branden Coluccio used vulnerable patients seeking substance use treatment to defraud insurance programs of millions of dollars. In New Jersey, Jason Gerner operated the drug and alcohol rehabilitation facility Liberation Way, using it to swindle the health care system and victimize vulnerable patients for profit. In Ohio, Ryan Sheridan made unnecessary and fraudulent testing claims while taking advantage of those suffering from substance use that were seeking care and treatment at his facilities. Stories like these can be found across the United States. This is not limited to one part of the country, and it is spreading.

Some treatment and recovery centers have been accused of labor trafficking. For example, residents that were referred to Christian Alcoholics and Addicts in Recovery by a drug court alleged that they were being forced to work with no training in unsafe conditions at a chicken plant. Although the residents’ case was eventually dismissed, Tulsa County ceased sending drug court offenders to their facility. Residents at Cenikor Foundation alleged that after they had been referred to the facility through a drug court, they worked at oil companies and university dining services throughout Texas and Louisiana, but were not paid for their labor.

COVID’S Impact and the Response to Treatment Fraud

As COVID-19 has exacerbated substance use, fraud continues to plague treatment centers. Late-night television advertisements prey upon persons grappling with substance use directing them to call phone banks that refer them to the highest bidder, not to those who provide the best, evidence-based treatment. Some of these predatory centers stalk social media advertisements, enticing concerned individuals with free plane tickets and yoga sessions. But when these individuals arrive, none of the promised benefits are available, and necessities may even be lacking. Law enforcement has cracked down on these websites, but the remaining ones learn from past mistakes and present an even more legitimate appearance. The burden is left on the consumer to discern the fake treatment centers from the real ones.

Towns, counties, cities, and villages have begun writing local housing ordinances banning non-single-family homes in an attempt to dissuade bad actors from setting up shop in their communities. Unfortunately, in some instances, these ordinances create another obstacle for additional beds in effective recovery homes. These ordinances are being challenged under the Fair Housing Act (FHA) and the Americans with Disabilities Act (ADA).