Eight School Drug Counselors Indicted In $50 Million Fraud Scheme (California)

Behavioral Health and your Tax Dollars, hard at work.

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An ongoing investigation into a Southern California drug counseling firm reveals a tangled web of false claims

September 7, 2015 | By Evan Sweeney

Eight drug counselors who provided substance abuse treatment to students in Southern California were indicted last week for participating in a decade-long fraud scheme that billed California's Drug Medi-Cal program $50 million, according to anannouncement by the Department of Justice.

All eight counselors worked for Atlantic Health Services (AHS), formerly known as Atlantic Recovery Services, based in Long Beach, California. Six of the defendants served as managers who supervised programs and counselors in dozens of schools throughout Los Angeles and surrounding counties. Beginning in 2003 and continuing through 2013, the defendants maintained false paperwork to support claims submitted to the state, according to the indictment. During that 10-year span, AHS falsified documents and billed for services provided to students who didn't have a substance abuse disorder, or for counseling sessions that never occurred.

Last week's indictment adds to the 11 other former AHS employees who have already pleaded guilty to the fraud charges, including Leland Whitson, M.D., the company's former medical/clinical director. However, Assistant U.S. Attorney Cathy Ostiller told the Associated Press that the eight recently arrested women were low-level employees and recovering drug abusers who were merely following orders in an effort to keep their job.

"As far as we can tell, most of these employees were minimum-wage earners," Ostiller told the AP, noting the investigation is ongoing. "They were not doing this for luxury yachts."

Drug treatment programs have been a target for fraud and abuse, including the infamous case involving the executives of Narco Freedom who were charged with organizing an illegal kickback scheme in which substance abuse patients were offered housing in exchange for outpatient programs that were covered by Medicaid. In June, The New York Times exposed a potential Medicaid fraud scheme tied to unregulated "three-quarter houses" in New York City. One particular owner forced residents into drug treatment programs, threatening them with eviction if they refused.

For more:
- here's the DOJ announcement
- see the indictment
- read the AP article

Related Articles:
Fraudulent Medicaid claims filed through drug treatment centers fund lavish purchases
New York City's unregulated 'three-quarter houses' ripe with Medicaid fraud
C-suite fraud: Cases and deterrents

Thank You Mr Sweeny and Fierce Health Payer Anti Fraud